Lorenzo-Netto, Srl, operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. 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. Workers then clean and vacuum the inside of the car. Workers are managed by a single supervisor. Lorenzo-Netto serviced 80,000 cars in 2018. Lorenzo-Netto reports the following costs for 2018:

Required 

1. Classify each account as variable or fixed with respect to cars washed. Explain. 

2. Lorenzo-Netto expects to wash 90,000 cars in 2019. Use the cost classification you developed in requirement 1 to estimate Lorenzo-Netto’s total costs in 2019. 

3. Calculate the average cost of washing a car in 2018 and 2019. (Use the expected 90,000 car wash level for 2019.)

Transcribed Image Text:

Account description Costs Car wash labour €240 000 Soap, cloth and supplies Water 32 000 28 000 Power to move conveyor belt Depreciation Supervision Cashier 72 000 64 000 30 000 16 000