Lorenzo operates a car wash. Incoming cars are put on an automatic conveyor belt. Cars are washed
Question:
Account Description Costs
Car wash labor .................................. $240,000
Soap, cloth, and supplies ...................... 32,000
Water ............................................. 28,000
Electric power to move conveyor belt ........ 72,000
Depreciation ..................................... 64,000
Salaries ........................................... 46,000
Required
1. Classify each account as variable or fixed with respect to the number of cars washed. Explain.
2. Lorenzo expects to wash 90,000 cars in 2007. Use the cost classification you developed in requirement 1 to estimate Lorenzo's total costs in 2007. Depreciation is computed on a straight-line basis?
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0131495388
12th edition
Authors: Charles T. Horngren, Srikant M. Datar, George Foster
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