Chapter 9 - Flexible budgets - In-Class Activities
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Exercise 9-8 Preparing a Flexible Budget
Auto Lavage is a Canadian company that owns and operates a large automatic carw
The following table provides data concerning the company’s costs:
$ 0.70 $ 1,400 0.10 0.30 4,700 0.40 8,300 2,100 Administrative 1,800 0.05 The company expects to charge customers an average of $5.90 per car washed.
Required:
Prepare a flexible budget for October assuming either 8,000 or 9,000 cars are washe
AUTO LAVAGE INC.
Flexible Budget
For the Month Ended October 31
Per Unit
Cars Washed
Number of units
8,000 9,000 Sales
$ 5.90 $ 47,200 $ 53,100 Variable expenses
Cleaning supplies
0.70 5,600 6,300 Electricity
0.10 800 900 Maintenance
0.30 2,400 2,700 Wages and salaries
0.40 3,200 3,600 Administrative
0.05 400 450 Total variable expenses
1.55 12,400 13,950 Contribution margin
$ 4.35 $ 34,800.00 $ 39,150.00 Fixed expenses
Wages and salaries
4,700 4,700 Rent
2,100 2,100 Depreciation
8,300 8,300 Electricity
1,400 1,400 Administrative
1,800 1,800 Total fixed expenses
18,300 18,300 Operating income
$ 16,500 $ 20,850 Fixed Cost per Month
Cost per Car Washed
Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent
wash facility near Quebec. ed.
Exercise 9-9 Flexible Budget Performance Report
Auto Lavage is a Canadian company that owns and operates a large automatic c
$ 0.70 $ 1,400 0.10 0.30 4,700 0.40 8,300 2,100 Administrative 1,800 0.05 For example, electricity costs are $1,400 per month plus $0.10 per car washed. T
Auto Lavage’s actual level of activity was 8,100 cars. The actual revenues and e
below:
Auto Lavage
Income Statement
For the Month Ended October 31
Actual cars washed
8,100 Sales
$ 49,300 Variable expenses
Cleaning supplies
6,075 Electricity
891 Maintenance
2,187 Wages and salaries
3,402 Administrative
486 Fixed expenses
Electricity
1,450 Wages and salaries
4,700 Depreciation
8,300 Rent
2,100 Administrative
1,745 Total expense
31,336 Net operating income
$ 17,964 Required:
The following table provides data concerning the company’s expected costs:
Fixed Cost per Month
Cost per Car Washed
Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent 8,000 cars in October and to collect an average of $5.90 per car washed.
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