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 $0.60 $0.06 $0.25 $0.20 $1,400 $4,900 $8,800 $2,100 $1,600 $0.03 For example, electricity costs are $1,400 per month plus $0.06 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.30 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 Expenses: $54,390 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 5,480 1,868 2,315 6,920 8,000 2, 300 1,749 28,632 $25,758 Total expense Net operating income

Explanation / Answer

Answer:-

Lavage Rapide Revenue & Spending Variances For the month ended August 31 Particulars Flexible Budget Actual Results Variances Remark $ $ $ Revenue 8400 car washed*$6.30 per car washed 52920 54390 1470 Favourable Less:-Expenses Cleaning expenses 8400 car washed*$.60 per car washed 5040 5480 -440 Unfavourable Electricity (8400 car washed*$.06 per car washed)+$1400 1904 1868 36 Favourable Maintenance 8400 car washed*$.25 per car washed 2100 2315 -215 Unfavourable Wages & salaries (8400 car washed*$.20 per car washed)+$4900 6580 6920 -340 Favourable Depreciation 8000 8000 0 None Rent 2100 2300 -200 Unfavourable Administrative expenses (8400 car washed*$.03 per car washed)+$1600 1852 1749 103 Favourable Income from opreations 25344 25758 414 Unfavourable

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