Auto Lavage is a Canadian company that owns and operates a large automatic carwa
ID: 2368785 • Letter: A
Question
Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. the following table provides data concerning the company's costs: For example, electricity costs are $1, 300 per month plus $0. 05 per car washed. the company expects to wash 8, 100 cars in October and to collect an average of $6. 30 per car washed. Compute the company's revenue and spending variances for October. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "IT for unfavorable, and "None" for no effect (i. e. , zero variance). Omit the "$" sign in your response. )Explanation / Answer
Auto Lavage
Revenue and Spending Variances
For the Month Ended October 31
Flexible Budget
Actual Results
Revenue and Spending Variances
Cars washed (q)...........................
8,100
8,100
Revenue ($5.90q)........................
$47,790
$49,300
$1,510
F
Expenses:
Cleaning supplies ($0.70q).........
5,670
6,100
430
U
Electricity ($1,400 + $0.10q)....
2,210
2,170
40
F
Maintenance ($0.30q)...............
2,430
2,640
210
U
Wages and salaries
($4,700 + $0.40q).................
7,940
8,260
320
U
Depreciation ($8,300)...............
8,300
8,300
0
Rent ($2,100)...........................
2,100
2,300
200
U
Administrative expenses
($1,800 + $0.05q).................
2,205
2,100
105
F
Total expense..............................
30,855
31,870
1,015
U
Net operating income...................
$16,935
$17,430
$ 495
F
Auto Lavage
Revenue and Spending Variances
For the Month Ended October 31
Flexible Budget
Actual Results
Revenue and Spending Variances
Cars washed (q)...........................
8,100
8,100
Revenue ($5.90q)........................
$47,790
$49,300
$1,510
F
Expenses:
Cleaning supplies ($0.70q).........
5,670
6,100
430
U
Electricity ($1,400 + $0.10q)....
2,210
2,170
40
F
Maintenance ($0.30q)...............
2,430
2,640
210
U
Wages and salaries
($4,700 + $0.40q).................
7,940
8,260
320
U
Depreciation ($8,300)...............
8,300
8,300
0
Rent ($2,100)...........................
2,100
2,300
200
U
Administrative expenses
($1,800 + $0.05q).................
2,205
2,100
105
F
Total expense..............................
30,855
31,870
1,015
U
Net operating income...................
$16,935
$17,430
$ 495
F
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