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Lavage Rapide owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the companys costs: Fixed Cost per

Lavage Rapide owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the companys costs:

Fixed Cost per Month Cost per Car Washed
Cleaning supplies $ 0.60
Electricity $ 1,500 $ 0.09
Maintenance $ 0.15
Wages and salaries $ 4,900 $ 0.40
Depreciation $ 8,200
Rent $ 1,900
Administrative expenses $ 1,800 $ 0.01

For example, electricity costs should be $1,500 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.90 per car washed.

The actual operating results for August are as follows:

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed 8,300
Revenue $ 58,680
Expenses:
Cleaning supplies 5,420
Electricity 2,208
Maintenance 1,470
Wages and salaries 8,540
Depreciation 8,200
Rent 2,100
Administrative expenses 1,782
Total expenses 29,720
Net operating income $ 28,960

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