Exercise 9-12 Prepare a Report Showing Revenue and Spending Variances [LO3] Auto
ID: 2461292 • Letter: E
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Exercise 9-12 Prepare a Report Showing Revenue and Spending Variances [LO3] 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 Cost per Car Washed 0.60 0.07 0.15 $ 0.30 Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 1,100 5,000 $ 8,300 $1,900 $ 1,700 0.01 For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expects to wash 8,300 cars in October and to collect an average of $6.40 per car washed The actual operating results for October appear below: Auto Lavage Income Statement For the Month Ended October 31 Actual cars washed Revenue 8,400 $ 55,220 Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 5,480 1,651 1,485 7,850 8,300 2,100 1,683 Total expense 28,549 Net operating income $ 26,671Explanation / Answer
Auto lavage Revenue & Spending Variance for the month ending October 31 Actual Budgeted for Actual Car Washed Spending variance Favourable/Unfavourable Per unit price $ Per unit price $ No of Actual Car washed 8400 Revenue 6.57 55,220 6.4 53760 Expenses Cleaning Supplies 0.65 5,480 0.6 5040 440 U Electricity 1,651 1588 63 U Maintainence 0.18 1,485 0.15 1260 225 U Wages & Salaries 7,850 7520 330 U Depreciation 8,300 8300 - None Rent 2,100 1900 200 U Administravie Exp 1,683 1784 -101 F Total Expenses 28,549 27,392 1,157 U Net operating Income 26,671 26,368 Spending Variance = $ 1157 U
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