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 $1,400 per month plus $0.09 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.00 per car washed.

The actual operating results for August appear below.

Required:

Calculate the company's 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.)

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.80 Electricity $ 1,400 $ 0.09 Maintenance $ 0.10 Wages and salaries $ 4,100 $ 0.30 Depreciation $ 8,400 Rent $ 2,200 Administrative expenses $ 1,500 $ 0.04 4 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 Cost per per Month Car Washed cleaning supplies Electricity Maintenance wages and salaries $0.80 $0.09 $0.10 $0.30 $1,400 4,100 $8,400 Adrministrative expenacs $1,500 $0.04 Reference For example, electricity costs are $1,400 per month plus $0.09 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.00 per car washed. The actual operating results for August appear below. Lavage Rapide For the Month Ended August 31 Actual cars vashed B,200 $50, 70O Expenses Cleaning supplies 6,980 2,099 1,050 Nages and salaries 6, 890 8,400 2,400 Electricity Maintenance Depreciation Administrative 1,724 Total expense Net operating income $21 157 Required: Calculate the company's revenue and spending varlances 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.) Revenue and Spending Variances Revenue Cleaning supplies Electrici Maintenance Depreciation Rent Administrative Total Net operating income

Explanation / Answer

Actual Fleible budget Revenue and spending variances Revenue 50700 49200 1500 F Expenses: Cleaning supplies 6980 6560 420 U Electricity 2099 2138 39 F Maintenance 1050 820 230 U Wages and salaries 6890 6560 330 U Depreciation 8400 8400 0 None Rent 2400 2200 200 U Administrative expenses 1724 1828 104 F Total expenses 29543 28506 1037 U Net operating income 21157 20694 463 F

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