FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table
provides data concerning the company's costs:
Cleaning supplies
Electricity
Maintenance
Rent
Wages and salaries.
Depreciation
Administrative expenses
$ 0.03
For example, electricity costs are $1,300 per month plus $0.06 per car washed. The company actually washed 8,600 cars in August
and collected an average of $6.10 per car washed.
Actual cars washed
Revenue
Expenses:
Required:
Prepare the company's flexible budget for August.
Cleaning supplies
Electricity
Maintenance
Answer is complete but not entirely correct.
Lavage Rapide
Flexible Budget
For the Month Ended August 31
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income
Fixed Cost Cost per Car
per Month
Washed
$0.40
$ 0.06
$0.15
$0.30
✓
$1,300
$ 4,500
$ 8,100
$
$
$ 2,000
$ 1,300
0x
0x
0x
0x
0x
0x
0x
0x
0x
0
0
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Transcribed Image Text:Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company's costs: Cleaning supplies Electricity Maintenance Rent Wages and salaries. Depreciation Administrative expenses $ 0.03 For example, electricity costs are $1,300 per month plus $0.06 per car washed. The company actually washed 8,600 cars in August and collected an average of $6.10 per car washed. Actual cars washed Revenue Expenses: Required: Prepare the company's flexible budget for August. Cleaning supplies Electricity Maintenance Answer is complete but not entirely correct. Lavage Rapide Flexible Budget For the Month Ended August 31 Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income Fixed Cost Cost per Car per Month Washed $0.40 $ 0.06 $0.15 $0.30 ✓ $1,300 $ 4,500 $ 8,100 $ $ $ 2,000 $ 1,300 0x 0x 0x 0x 0x 0x 0x 0x 0x 0 0
Expert Solution
Check Mark
Step 1

Introduction:

In preparing flexible budget for the company, fixed expenses are taken as budgeted and variable expenses are considered on the basis of actual quantity. Variable expenses are calculated as under:

Variable expenses = Actual quantity * Variable cost per unit

 

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