Referring to the following data: AUTOLAV INC Flexible Budget Monthly activity (c
ID: 2488861 • Letter: R
Question
Referring to the following data:
AUTOLAV INC
Flexible Budget
Monthly activity (cars washed)
Per car
7,000
8,000
9,000
Sales
10
70,000
$80,000
90,000
Variable Expenses:
Cleaning Supplies
0.75
5,250
6,000
6,750
Utilities
0.60
4,200
4,800
5,400
Maintenance
0.15
1,050
1,200
1,350
Total variable expenses
1.50
10,500
12,000
13,500
Contribution margin
8.50
59,500
68,000
76,500
Fixed Expenses:
Operator Wages
10,000
10,000
10,000
Depreciation
20,000
20,000
20,000
Rent
8,000
8,000
8,000
Insurance
1,000
1,000
1,000
Selling and Administrative
4,000
4,000
4,000
Total fixed expenses
43,000
43,000
43,000
Operating income
16,500
25,000
33,500
AutoLav Inc’s actual level of activity was 7,800 cars. The actual revenues and expenses for August are given below:
Actual Data for 7,800 cars
Sales
78,000
Variable Expenses:
Cleaning Supplies
5,725
Utilities
4,795
Maintenance
1,400
Fixed Expenses:
Operator Wages
10,270
Depreciation
20,100
Rent
8,000
Insurance
1,090
Selling and Administrative
3,750
Prepare a flexible budget performance report for August.
Prepare a comprehensive performance report for August. Assume that the static budget for August was based on an activity level of 8,000 cars.
AUTOLAV INC
Flexible Budget
Monthly activity (cars washed)
Per car
7,000
8,000
9,000
Sales
10
70,000
$80,000
90,000
Variable Expenses:
Cleaning Supplies
0.75
5,250
6,000
6,750
Utilities
0.60
4,200
4,800
5,400
Maintenance
0.15
1,050
1,200
1,350
Total variable expenses
1.50
10,500
12,000
13,500
Contribution margin
8.50
59,500
68,000
76,500
Fixed Expenses:
Operator Wages
10,000
10,000
10,000
Depreciation
20,000
20,000
20,000
Rent
8,000
8,000
8,000
Insurance
1,000
1,000
1,000
Selling and Administrative
4,000
4,000
4,000
Total fixed expenses
43,000
43,000
43,000
Operating income
16,500
25,000
33,500
Explanation / Answer
Flexible Budget Performance report Flexible Budget Actual Varaince Sales 78000 78,000 - No variance Variable Expenses: Cleaning Supplies 5850 5,725 125 F Utilities 4680 4,795 115 UF maintenance 1170 1,400 230 UF Total Variable Expenses 11,700 11,920 220 UF Contribution Margin 66,300 66,080 220 UF Fixed Expenses: Operator Wages 10000 10,270 270 UF Depriciation 20000 20,100 100 UF Rent 8000 8,000 - No variance Insurance 1000 1,090 90 UF Selling & Administrative 4000 3,750 250 F Total Fixed Expenses 43,000 43,210 210 UF Operating Income 23,300 22,870 430 UF Comprehensive Performance report Static Actual Varaince Sales 80000 78,000 2,000 UF Variable Expenses: Cleaning Supplies 6000 5,725 275 F Utilities 4800 4,795 5 F maintenance 1200 1,400 200 UF Total Variable Expenses 12,000 11,920 80 F Contribution Margin 68,000 66,080 1,920 UF Fixed Expenses: Operator Wages 10000 10,270 270 UF Depriciation 20000 20,100 100 UF Rent 8000 8,000 - No variance Insurance 1000 1,090 90 UF Selling & Administrative 4000 3,750 250 F Total Fixed Expenses 43,000 43,210 210 UF Operating Income 25,000 22,870 2,130 UF
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