Question

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company's costs: Fixed Cost per Month Cost per Car Washed $ 0.70 $ 0.10 $ 0.10 $ 0.40 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,500 $4,600 $8,100 $2,000 $1,700 $ 0.03 For example, electricity costs are $1,500 per month plus $0.10 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.30 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,100 Revenue $52,500 Expenses: Cleaning supplies 6.100 Electricity 2,270 Maintenance 1,040 Wages and salaries 8,160 Depreciation 8,100 Rent 2,200 Administrative expenses 1,840 Total expense 29,710 Net operating income $22,790 Required: Complete the flexible budget performance report that shows the company's activity variances and 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.)

Answer 1

Answer

	Revenue & Spending Variance		Activity variance
Revenues	$         1,470.00	F	$                630.00	F
Expenses:
Cleaning Supplies	$             430.00	U	$                  70.00	U
Electricity	$               40.00	F	$                  10.00	U
Maintenance	$             230.00	U	$                  10.00	U
Wages & Salaries	$             320.00	U	$                  40.00	U
Depreciation	$                      -	N	$                         -	None
Rent	$             200.00	N	$                         -	None
Administrative expense	$             103.00	F	$                     3.00	U
Total Expenses	$         1,037.00	U	$                133.00	U
Net Operating Income	$             433.00	F	$                497.00	F

--Working

		WORKING COLUMNS					Flexible Budget	Planning Static Budget
Cars washed							8,100	8,000
Revenues				$      6.30			$             51,030.00	$          50,400.00
Expenses:
Cleaning Supplies	(	$                      -	)	$      0.70	x 8100 or 8000		$               5,670.00	$             5,600.00
Electricity	(	$         1,500.00	)	$      0.10	x 8100 or 8000	)	$               2,310.00	$             2,300.00
Maintenance	(	$                      -	+	$      0.10	x 8100 or 8000	)	$                   810.00	$                800.00
Wages & Salaries	(	$         4,600.00	+	$      0.40	x 8100 or 8000	)	$               7,840.00	$             7,800.00
Depreciation	(	$         8,100.00	+	$           -	x 8100 or 8000		$               8,100.00	$             8,100.00
Rent	(	$         2,000.00	)	$           -	x 8100 or 8000		$               2,000.00	$             2,000.00
Administrative expense	(	$         1,700.00	+	$      0.03	x 8100 or 8000	)	$               1,943.00	$             1,940.00
Total Expenses		$      17,900.00		$      1.33			$             28,673.00	$          28,540.00
Net Operating Income							$             22,357.00	$          21,860.00