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:

For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company expects to wash 8,400 cars in August and to collect an average of $6.20 per car washed. The company actually washed 8,500 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.)

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.60 Electricity $ 1,200 $ 0.09 Maintenance $ 0.30 Wages and salaries $ 4,800 $ 0.30 Depreciation $ 8,100 Rent $ 2,000 Administrative expenses $ 1,600 $ 0.02 3 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 Cost per Car Washed $0.60 $0.09 $0.30 $0.30 points Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,200 $4,800 $8,100 $2,000 $1,600 eBook $0.02 Print For example, electricty costs are $1,200 per month plus $0.09 per car washed. The company expects to wash 8,400 cars in August and to collect an average of $6.20 per car washed. The company actually washed 8,500 cars in August References Required: Calculate the company's activity variances for August. (Indicate the effect of each varlance 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 Wages and salaries Rent Total expense Net operating income

Explanation / Answer

Lavage Rapide Activity Variance For the Month Ended August Particulars Activity Variance Cars excess washed (q) 100 Revenue ($6.20q) 620 F Expenses:(only variable conisdered) Cleaning supplies ($0.60q) 60 U Electricity ($1,200 + $0.09q) 9 U Maintenance ($0.3q) 30 U Wages and salaries ($4,800 + $0.30q) 30 U Depreciation ($8,100) 0 None Rent ($2,000) 0 None Administrative expenses($1,600 + $0.02q) 2 U Total expense 131 U Net operating income 489 F

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