Question

Exercise 9-14 Prepare a Flexible Budget Performance Report (LO9-4] 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 $1,500 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.50 $0.08 $0.25 $0.30 $4,800 $8,100 $2,100 $1,400 $0.03 For example, electricity costs are $1,500 per month plus $0.08 per car washed. The company expects to wash 8,400 cars in August and to collect an average of $6.30 per car washed.

Answer 1

Answer-

LAVAGE RAPIDE
FLEXIBLE BUDGET PERFORMANCE REPORT
FOR THE MONTH ENDED AUGUST 31
PARTICULARS	REVENUE & SPENDING VARIANCE	REMARK	ACTIVITY VARIANCE	REMARK
	$		$
Revenue	1470	Favorable	630	Favorable
Less:-Expenses
Cleaning expenses	-450	Unfavorable	-50	Unfavorable
Electricity	38	Favorable	-8	Unfavorable
Maintenance	-215	Unfavorable	-25	Unfavorable
Wages & salaries	-330	Unfavorable	-30	Unfavorable
Depreciation	0	None	0	None
Rent	-200	Unfavorable	0	None
Administrative expenses	103	Favorable	-3	Unfavorable
Total Expenses	-1054	Unfavorable	-116	Unfavorable
Income from operations	416	Favorable	514	Favorable

Explanation-

Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8500 car washed*$6.30 per car washed	53550	55020	1470	Favorable
Less:-Expenses
Cleaning expenses	8500 car washed*$0.50 per car washed	4250	4700	-450	Unfavorable
Electricity	(8500 car washed*$0.08 per car washed)+$1500	2180	2142	38	Favorable
Maintenance	8500 car washed*$0.25 per car washed	2125	2340	-215	Unfavorable
Wages & salaries	(8500 car washed*$0.30 per car washed)+$4800	7350	7680	-330	Unfavorable
Depreciation		8100	8100	0	None
Rent		2100	2300	-200	Unfavorable
Administrative expenses	(8500 car washed*$0.03 per car washed)+$1400	1655	1552	103	Favorable
Total expenses		27760	28814	-1054	Unfavorable
Income from operations		25790	26206	416	Favorable
Lavage Rapide
Activity Variance
For the month ended August 31
Particulars	Planning Budget	Flexible Budget	Variances	Remark
	$	$	$
Revenue	8400 car washed*$6.30 per car washed= 52920	53550	630	Favorable
Less:-Expenses
Cleaning expenses	8400 car washed*$0.50 per car washed= 4200	4250	-50	Unfavorable
Electricity	(8400 car washed*$0.08 per car washed)+$1500= 2172	2180	-8	Unfavorable
Maintenance	8400 car washed*$0.25 per car washed= 2100	2125	-25	Unfavorable
Wages & salaries	(8400 car washed*$0.30 per car washed)+$4800= 7320	7350	-30	Unfavorable
Depreciation	8100	8100	0	None
Rent	2100	2100	0	None
Administrative expenses	(8400 car washed*$0.03 per car washed)+$1400= 1652	1655	-3	Unfavorable
Total Expenses	27644	27760	-116	Unfavorable
Income from operations	25276	25790	514	Favorable