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 carwash facility near Montreal. The following table provides data concerning the company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,100 $ 0.08 Maintenance $ 0.15 Wages and salaries $ 4,300 $ 0.40 Depreciation $ 8,400 Rent $ 2,000 Administrative expenses $ 1,400 $ 0.02 For example, electricity costs are $1,100 per month plus $0.08 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.70 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,400 Revenue $ 57,710 Expenses: Cleaning supplies 7,140 Electricity 1,734 Maintenance 1,485 Wages and salaries 7,980 Depreciation 8,400 Rent 2,200 Administrative expenses 1,466 Total expense 30,405 Net operating income $ 27,305 Required: Complete the flexible budget performance report that shows the company’s activity variances and revenue and spending 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.)

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Cars washed 8400 8400 8300 Revenue 57710 1430 F 56280 670 F 55610 Expenses: Cleaning supplies 7140 420 U 6720 80 U 6640 Electricity 1734 38 F 1772 8 U 1764 Maintenance 1485 225 U 1260 15 U 1245 Wages and salaries 7980 320 U 7660 40 U 7620 Depreciation 8400 0 None 8400 0 None 8400 Rent 2200 200 U 2000 0 None 2000 Administrative expenses 1466 102 F 1568 2 U 1566 Total expenses 30405 1025 U 29380 145 U 29235 Net operating income 27305 405 F 26900 525 F 26375

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