Account analysis method. Lorenzo operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. Cars are washed as the conveyor belt carries the car from the start station to the finish station. After the car moves off the conveyor belt, the car is dried manually. Workers then clean and vacuum the inside of the car. Lorenzo serviced 80,000 cars in 2009. Lorenzo reports the following costs for 2009:

REQUIRED 1. Classify each account as variable or fixed with respect to cars washed. Explain.
2 Lorenzo expects to wash 90,000 cars in 2010. Use the cost classification you developed in requirement | to estimate Lorenzo’s total costs in 2010. Amortization is computed on a straight-line basis.LO1

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Account Description Costs Car wash labour 1 $260,000 Soap, cloth, and supplies 42,000 Water 38,000 Electric power to move conveyor belt 72,000 Amortization 64,000 Salaries 46,000