84% ?], Sun 3:34 PM ezto.mheducation.com Su18 ACCT 2112-51 Managerial Acc... ExP

Question

84% ?], Sun 3:34 PM ezto.mheducation.com Su18 ACCT 2112-51 Managerial Acc... ExP 10 Assignment Results 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 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.50 $0.05 $0.15 $ 0.40 $1,200 $4,600 $8,000 $1,900 $1,700 $ 0.03 For example, electricity costs are $1,200 per month plus $0.05 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.50 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed Revenue Expenses: 8,600 $57,350 4,750 1,595 1,515 8,360 8,000 2,100 Administrative expenses 1,855 28,175 $29,175 Cleaning supplies Maintenance Wages and salaries Depreciation Rent Total expense Net operating income

Explanation / Answer

Lavage Rapide Flexible Budget performance report For the month ended August 31 Revenue and Spending Variances Activity Variance Cars washed (q) Revenue ($6.50 X q) $   1,450 F $     650 F Expenses: Cleaning ($0.50 X q) $       450 U $       50 U Electricity [$1,200+ ($0.05 X q)] $         35 F $         5 U Maintenance ($0.15X q) $       225 U $       15 U Wages and Salaries [$4,600+ ($0.40 X q)] $       320 U $       40 U Depreciation $8,000 $          -   None $        -   None Rent $1,900 $       200 U $        -   None Administrative Expenses [$1,700+ ($0.03 X q)] $       103 F $         3 U Total expense $   1,057 U $     113 U Net operating income $       393 F $     537 F Workings: Lavage Rapide Flexible Budget performance report For the month ended August 31 Planning Budget Flexible Budget Activity Variance Cars washed (q)        8,500        8,600 Revenue ($6.50 X q) $ 55,250 $ 55,900 $     650 F Expenses: Cleaning ($0.50 X q) $   4,250 $   4,300 $       50 U Electricity [$1,200+ ($0.05 X q)] $   1,625 $   1,630 $         5 U Maintenance ($0.15X q) $   1,275 $   1,290 $       15 U Wages and Salaries [$4,600+ ($0.40 X q)] $   8,000 $   8,040 $       40 U Depreciation $8,000 $   8,000 $   8,000 $        -   None Rent $1,900 $   1,900 $   1,900 $        -   None Administrative Expenses [$1,700+ ($0.03 X q)] $   1,955 $   1,958 $         3 U Total expense $ 27,005 $ 27,118 $     113 U Net operating income $ 28,245 $ 28,782 $     537 F Lavage Rapide Flexible Budget performance report For the month ended August 31 Flexible Budget Actual results Revenue and Spending Variances Cars washed (q)        8,600        8,600 Revenue ($6.50 X q) $ 55,900 $ 57,350 $ 1,450 F Expenses: Cleaning ($0.50 X q) $   4,300 $   4,750 $     450 U Electricity [$1,200+ ($0.05 X q)] $   1,630 $   1,595 $       35 F Maintenance ($0.15X q) $   1,290 $   1,515 $     225 U Wages and Salaries [$4,600+ ($0.40 X q)] $   8,040 $   8,360 $     320 U Depreciation $8,000 $   8,000 $   8,000 $        -   None Rent $1,900 $   1,900 $   2,100 $     200 U Administrative Expenses [$1,700+ ($0.03 X q)] $   1,958 $   1,855 $     103 F Total expense $ 27,118 $ 28,175 $ 1,057 U Net operating income $ 28,782 $ 29,175 $     393 F

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