Question
Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the companys
Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the companys expected costs:
Fixed Cost per Month | Cost per Car Washed | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cleaning supplies | $ | 0.90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Electricity | $ | 2,050 | 0.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maintenance | 0.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wages and salaries | 5,300 | 0.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation | 8,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rent | 2,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Administrative expenses | 2,410 | 0.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For example, electricity costs are $2,050 per month plus $0.30 per car washed. The company expects to wash 8,600 cars in October and to collect an average of $8.00 per car washed. Auto Lavages actual level of activity was 8,700 cars. The actual revenues and expenses for October are given below:
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