Lorenzo operates a brushless car wash. A cashier is the customer's first point of contact and is always on duty during operating hours. The cashier determines the level of wash(standard, deluxe, or extreme) and collects the price of the wash. Incoming cars are put on a continuously moving conveyor belt. The belt runs regardless of wether there is a car being washed. 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 by hourly workers.Workers also clean and vacuum the inside of the car. The number of cars being washed determine the number of hourly workers needed. Workers are managed by single supervisor. Lorenzo served 80,000cars in 2016. Lorenzo reports the following costs for 2016:

Fixed Variable

Car wash hourly wages -----------------------------------------------------$240,000

Soap, cloth,and supplies ---------------------------------------------------32,000

Water -------------------------------------------------------------------------------28,000

Power to move conveyor belt ------------------------------------------------72,000

Depreciation -----------------------------------------------------------------------64,000

Supervision salary per year --------------------------------------------------30,000

Cashier salary part-time --------------------------------------------------------16,000

Required:

(1) Classify each cost as variable or fixed with respect to the number of cars washed.

(2) Lorenzo expects to wash 90,000 cars in 2017. Use the cost classification devoloped in requirement #1 to estimate Lorenzo's total cost in 2017.

(3) Calculate the average cost of washing a car in 2016 and 2017 (use the 80,000 actual for 2016 and the expected 90,000 car wash level for 2017) - Explain your answer as to why the average cost "per car" has changed and why it wnt up or down.