Fixed CostCost per Month Car Washed per Cleaning supplies Electricity Maintenanc

Question

Fixed CostCost per Month Car Washed per Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $ 0.40 0.09 0.30 $0.40 $1.100 $4,100 58,400 $1,800 $1,500 0.01 For example, electricity costs are $1.100 per month plus $0.09 per car washed. The company expected to wash 8,400 cars in August and to collect an average or $6.30 per car washed. The company actually washed 8,500 cars. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed Revenue Expenses: 8,500 S 55,020 Cleaning supplies Electricity Maintenance Wages and salaries 3,860 1,826 2,760 7.820 8,400 2,000 1,484 Rent Administrative expenses Total expense Net operating income $ 26,870 Required Compute 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.)

Explanation / Answer

Planning budget Activity variances Flexible budget Cars washed 8400 8500 Revenue 52920 630 F 53550 Expenses: Cleaning supplies 3360 40 U 3400 Electricity 1856 9 U 1865 Maintenance 2520 30 U 2550 Wages and salaries 7460 40 U 7500 Depreciation 8400 0 None 8400 Rent 1800 0 None 1800 Administrative expenses 1584 1 U 1585 Total expense 26980 120 U 27100 Net operating income 25940 510 F 26450

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