Prepare the company's flexible budget for August.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table
provides estimates concerning the company's costs:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Administrative expenses
Rent
Lavage Rapide
Flexible Budget
For the Month Ended August 31
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Fixed
Cost per
Month
$ 1,300
$ 4,800
$ 8,000
$ 2,100
$ 1,500
For example, electricity costs should be $1,300 per month plus $0.06 per car washed. The company actually washed 8,500 cars in
August and collected an average of $6.50 per car washed.
Administrative expenses
Cost per
Car Washed
Required:
Prepare the company's flexible budget for August.
Total expense
Net operating income
$ 0.50
$ 0.06
$ 0.20
$ 0.30
$ 0.05](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fffb3b9ba-e337-4d26-9e40-486389d821b6%2F285b3070-c1af-402c-9991-767dea3d2a49%2Fwmpflno_processed.jpeg&w=3840&q=75)
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