Question $3$ Flexible Budgeting for Service Operations

Korara Company operates a car washing business and is in the process of preparing an operating budget for the coming year. Korara has provided the following information:

Details Number

Car Washing Revenue per car $($average$)$

$$40\mathrm{.}00$

Variable costs per charge out hour:

Labour costs per job

$16\mathrm{.}25$

Consumables per job $($shampoo etc$)$

$4\mathrm{.}15$

Travelling$/$Motor Vehicle expenses

$2\mathrm{.}50$

Fixed costs:

Advertising

$3,000$

Depreciation $($motor vehicle & equipment$)$

$3,850$

Insurance

$1,175$

Mobile telephone costs

$2,000$

Office costs

$5,130$

Required:

Based on the above information, prepare a detailed Income Statement Budget, including the Net Profit Margin $\%,$ for the coming year using flexible budgeting techniques, assuming that the company will wash:

$($a$)1,250$ cars;

$($b$)1,450$ cars; or

$($c$)1,650$ cars.