Toonie Car Washing Company reports the following costs and account analysis classification for 14,400 car washings for the year ended December 31, 2012:
REQUIRED
A. What is the variable cost per car wash? What is the total fixed cost for 14,400 car washings? Prepare the cost equation.
B. What will be the total costs if Toonie has 16,800 car washings in 2013 (assuming no cost increases)?
C. Assume that Toonie anticipates the following changes in the costs in 2014:
• Direct materials to increase by 3%.
• Direct labour to increase by 4%.
• Rent to increase by 4%.
• Amortization to increase by 5%.
What is the variable cost per car wash? What is the total fixed cost for 18,000 car washings? Prepare the cost equation.
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