Lavage Rapide is a Canadian company that owns and operates a large automatic car

Question

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expected to wash 8,400 cars in August and to collect an average of $6.80 per car washed. The company actually washed 8,500 cars in August.

  

Compute the company's activity variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

Fixed Cost
per Month Cost per
Car Washed   Cleaning supplies         $ 0.50        Electricity   $ 1,400      $ 0.10        Maintenance         $ 0.25        Wages and salaries   $ 4,400      $ 0.20        Depreciation   $ 8,400              Rent   $ 2,200              Administrative expenses   $ 1,400      $ 0.04     

For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expected to wash 8,400 cars in August and to collect an average of $6.80 per car washed. The company actually washed 8,500 cars in August.

  

Required:

Compute the company's activity variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Lavage Rapide Activity Variances For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income

Explanation / Answer

Activity Variances

Budgeted Actual Varaince Revenue 57120 57800 680 F Expenses: Cleaning supplies 4200 4250 50 U Electricity 2240 2250 10 U Maintenance 2100 2125 25 U Wages and salaries 6080 6100 20 U Depreciation 8400 8500 100 U Rent 2200 2200 0 Administrative expenses 1736 1740 4 U Total expense 26956 27165 209 U Net operating income 30164 30635 471 F

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