Auto Lavage is a Canadian company that owns and operates a large automatic carwa
ID: 2373744 • 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 $1,100 per month plus $0.08 per car washed. The company expects to wash 8,300 cars in October and to collect an average of $5.90 per car washed.
Complete the flexible budget performance report that shows the company's activity variances and revenue and spending variances for October. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
per Month Cost per
Car Washed
Explanation / Answer
Flexible Budget revenue Report:
Revenue = 5.90 * 8400 = 49,560 (Given that the average earnings = 5.90$ per car)
No. Of Cars Washed : 8,400
Expenses:
Cleaning Supplies : 8400 * 0.40 = 3360
Electricity : 1100 + 0.08 * 8400 = 1772
Maintenance = 8400 * 0.10 = 840
Wages and Salalry : 8400*0.20 + 4300 = 5980
Depreciation : 8200
Rent : 2200
Administrative Expenses : 8400 * 0.01 + 1700 = 1784
Total Expenses : 24,136
Net operating income : 49,560 - 24,136 = 25,424
The variances cn be found out by finding the differences between the calculated values and th expected values.
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