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: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.70 Electricity $ 1,200 $ 0.09 Maintenance $ 0.25 Wages and salaries $ 4,700 $ 0.30 Depreciation $ 8,300 Rent $ 2,200 Administrative expenses $ 1,800 $ 0.03 For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company actually washed 8,300 cars in August and collected an average of $6.80 per car washed. Required: Prepare the company’s flexible budget for August.
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: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.70 Electricity $ 1,200 $ 0.09 Maintenance $ 0.25 Wages and salaries $ 4,700 $ 0.30 Depreciation $ 8,300 Rent $ 2,200 Administrative expenses $ 1,800 $ 0.03 For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company actually washed 8,300 cars in August and collected an average of $6.80 per car washed. Required: Prepare the company’s flexible budget for August.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter22: Budgeting
Section: Chapter Questions
Problem 2E: Digital Solutions Inc. uses flexible budgets that are based on the following data: Prepare a...
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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:
| Fixed Cost per Month |
Cost per Car Washed |
||||
| Cleaning supplies | $ | 0.70 | |||
| Electricity | $ | 1,200 | $ | 0.09 | |
| Maintenance | $ | 0.25 | |||
| Wages and salaries | $ | 4,700 | $ | 0.30 | |
| $ | 8,300 | ||||
| Rent | $ | 2,200 | |||
| Administrative expenses | $ | 1,800 | $ | 0.03 | |
For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company actually washed 8,300 cars in August and collected an average of $6.80 per car washed.
Required:
Prepare the company’s flexible budget for August.
Transcribed Image Text:Required:
Prepare the company's flexible budget for August.
Lavage Rapide
Flexible Budget
For the Month Ended August 31
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income
$
%24
Expert Solution
Step 1
A flexible budget is that budget which includes all the flexibility and change in the output. In comparison to Static budget, the flexible budget is more useful. It includes Fixed and variable both.
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