Lavage Rapide is a Canadian company that owns and operates a large automatic car
ID: 2426953 • Letter: L
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 $1,200 per month plus $0.15 per car washed. The company expected to wash 9,000 cars in August and to collect an average of $4.90 per car washed. The company actually washed 8,800 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:
For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expected to wash 9,000 cars in August and to collect an average of $4.90 per car washed. The company actually washed 8,800 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.)
Cost per Car Washed 0.80 $0.15 0.20 0.30 Fixed Cost per Montlh Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,200 $ 5,000 $ 6,000 $ 8,000 $ 4,000 0.10
Explanation / Answer
LAVAGE RAPIDE ACTIVITY VARIANCES FOR THE MONTH ENDED AUGUST 31 Planning Budget Flexible Budget Activity Variance Cars Washed (A) 9000 8000 $ Revenue ($4.90 * A) 44100 39200 4900 unfavourable Expenses: Cleaning Supplies (0.80*A) 7200 6400 800 favourable Electricity ( 1200 + 0.15*A) 2550 2400 150 favourable Maintenance (0.20*A) 1800 1600 200 favourable Wages & Salaries (5000 +0.30*A) 7700 7400 300 favourable Depreciation 6000 6000 0 no change Rent 8000 8000 0 no change Administrative Expenses(4000 +0.10*A) 4900 4800 100 favourable Total Expense 38150 36600 1550 favourable Net operating Income 5950 2600 unfavourable
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