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 car wash 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 $0.80 $0.07 $0.20 $0.30 $1,100 $4,300 $8,200 $1,900 $1,500 $0.03 For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.50 per car washed. The company actually washed 8,300 cars in August. Required Calculate 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 variance

Revenue 650 F Expense Cleaning supplies 80 U Electricity 7 U Maintenance 20 U Wages and salaries 30 U Depreciation None Rent None Administrative expenses 3 U Total expense 140 U Net operating income 510 F

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