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 $1,200 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.80 $0.15 $0.20 $0.30 $5,000 $6,000 $ 8,000 $4,000 $0.10 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 actual operating results for August are as follows: Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,800 $ 43,080 Revenue Expenses : Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 7,560 2,670 2,260 8,500 6,000 8,000 4,950 39,940 3, 140 $ Required: Prepare a flexible budget performance report that shows the company's revenue and spending variances and 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 Flexible Budget Performance Report For the Month Ended August 31 Flexible Budget Actual Results 8,800 Planning Budget Cars washed Prey 6 of 7 !! Neyt

Answer 1

Answer-

LAVAGE RAPIDE
FLEXIBLE BUDGET PERFORMANCE REPORT
FOR THE MONTH ENDED AUGUST 31
PARTICULARS	REVENUE & SPENDING VARIANCE	REMARK	ACTIVITY VARIANCE	REMARK
	$		$
Revenue	-40	Unfavorable	-980	Unfavorable
Less:-Expenses
Cleaning expenses	-520	Unfavorable	160	Favorable
Electricity	-150	Unfavorable	30	Favorable
Maintenance	-500	Unfavorable	40	Favorable
Wages & salaries	-860	Unfavorable	60	Favorable
Depreciation	0	None	0	None
Rent	0	None	0	None
Administrative expenses	-70	Unfavorable	20	Favorable
Total Expenses	-2100	Unfavorable	310	Favorable
Income from operations	-2140	Unfavorable	-670	Unfavorable

Explanation-

Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8800 car washed*$4.90 per car washed	43120	43080	-40	Unfavorable
Less:-Expenses
Cleaning expenses	8800 car washed*$0.80 per car washed	7040	7560	-520	Unfavorable
Electricity	(8800 car washed*$0.15 per car washed)+$1200	2520	2670	-150	Unfavorable
Maintenance	8800 car washed*$0.20 per car washed	1760	2260	-500	Unfavorable
Wages & salaries	(8800 car washed*$0.30 per car washed)+$5000	7640	8500	-860	Unfavorable
Depreciation		6000	6000	0	None
Rent		8000	8000	0	None
Administrative expenses	(8800 car washed*$0.10 per car washed)+$4000	4880	4950	-70	Unfavorable
Total expenses		37840	39940	-2100	Unfavorable
Income from operations		5280	3140	-2140	Unfavorable
Lavage Rapide
Activity Variance
For the month ended August 31
Particulars	Planning Budget	Flexible Budget	Variances	Remark
	$	$	$
Revenue	9000 car washed*$4.90 per car washed= 44100	43120	-980	Unfavorable
Less:-Expenses
Cleaning expenses	9000 car washed*$0.80 per car washed= 7200	7040	160	Favorable
Electricity	(9000 car washed*$0.15 per car washed)+$1200= 2550	2520	30	Favorable
Maintenance	9000 car washed*$0.20 per car washed= 1800	1760	40	Favorable
Wages & salaries	(9000 car washed*$0.30 per car washed)+$5000=7700	7640	60	Favorable
Depreciation	6000	6000	0	None
Rent	8000	8000	0	None
Administrative expenses	(9000 car washed*$0.10 per car washed)+$4000=4900	4880	20	Favorable
Total Expenses	38150	37840	310	Favorable
Income from operations	5950	5280	-670	Unfavorable