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 $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 per car washed. The company actually washed 8,800 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

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.80 Electricity $ 1,200 $ 0.15 Maintenance $ 0.20 Wages and salaries $ 5,000 $ 0.30 Depreciation $ 6,000 Rent $ 8,000 Administrative expenses $ 4,000 $ 0.10

Explanation / Answer

Planning budget Flexible budget Activity variances Revenue 44100 43120 980 U Expenses Cleaning Supplies 7200 7040 160 F Electricity 2550 2520 30 F Maintenance 1800 1760 40 F Wages and Salaries 7700 7640 60 F Depreciation 6000 6000 0 None Rent 8000 8000 0 None Administrative Expenses 4900 4880 20 F Total Expenses 38150 37840 310 F Net Operating Income 5950 5280 670 U

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