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 $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.70 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 $ 0.60 Electricity $ 1,200 $ 0.09 Maintenance $ 0.25 Wages and salaries $ 4,300 $ 0.30 Depreciation $ 8,200 Rent $ 2,200 Administrative expenses $ 1,400 $ 0.02 Lavage Rapide Revenue and Spending Variances For the Month Ended August 31 Revenue Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses None Total expense Net operating income

Explanation / Answer

CALCULATE REVENUE AND SPENDING VARIANCE :

Actual results Flexible budget Revenue and spending variance Revenue 57710 56280 1430 F Expenses : Cleaning supplies 5480 5040 440 U Electricity 1917 1956 39 F Maintenance 2315 2100 215 U Wages and salaries 7150 6820 330 U Depreciation 8200 8200 None Rent 2400 2200 200 U Administrative expense 1466 1568 102 F Total expense 28928 27884 1044 U Net operating income 28782 28396 386 F

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