Return to question 3 Lavage Rapide is a Canadian company that owns and operates

Question

Return to question 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 $0.40 $0.08 $0.10 $0.30 points Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,100 $4,800 $8,000 $2,000 $1,500 $0.02 For example, electricity costs are $1,100 per month plus $0.08 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.00 per car washed. The actual operating results for August appear below. Lavage Rapide Incone Statement For the Month Ended August 31 Actual cars washed 8,300 $51,300 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 3,780 1,726 1,060 7,620 8,000 2,200 1,564 25,950 $25,350 Total expense Net operating income Mc 4 Prew

Explanation / Answer

Revenue and Spending Variance is as computed below:

Lavage Rapide Activity variances For the Month Ended August 31 Planning Budget Flexible Budget Actual Revenue and spending variances (Actual - Flexible) Car Wash (a) 8,200 8,300 8,300 0 Revenue (6*a) 49,200 49,800 51,300 1,500 F Expenses:    Cleaning Supplies (0.40a) 3,280 3,320 3,780 460 U    Electricity (1,100+ .08a) 1,756 1,764 1,726 -38 F    Maintenance (.10a) 820 830 1,060 230 U    Wages and salaries (4,800+.30a) 7,260 7,290 7,620 330 U    Depreciation (8,000) 8,000 8,000 8,000 0 None    Rent (2,000) 2,000 2,000 2,200 200 U    Administrative expenses (1,500+.02a) 1,664 1,666 1,564 -102 F Total expenses 24,780 24,870 25,950 1,080 U Net operating income 24,420 24,930 25,350 420 F

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