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 $1,200 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.68 se.08 $0.30 $9.29 $4,5ee $8, 2ee $1,800 $1,4ee $8.01 For example, electricity costs are $1,200 per month plus $0.08 per car washed. The company expects to wash 8.300 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 8,480 $ 54, 398 5.480 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 1,834 2,730 6, 520 8,280 2.ee 1,383 28,147 $ 26,243 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 varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Input all amounts as positive values.) Lavage Rapide Flexible Budget Performance Report For the Month Ended August 31 Actual Flexible Results Budget 8.400 Planning Budget Cars washed Revenue $ 54,390 Expenses: Cleaning supplies 5.480

Answer 1

Answer

• Flexible Budget Performance Report

	Actual Result	Revenue & Spending Variance		Flexible Budget	Activity variance		Planning Static Budget
Cars washed	8,400			8,400			8,300
Revenues	$               54,390.00	$         1,470.00	F	$             52,920.00	$                630.00	F	$          52,290.00
Expenses:
Cleaning Supplies	$                 5,480.00	$             440.00	U	$               5,040.00	$                  60.00	U	$             4,980.00
Electricity	$                 1,834.00	$               38.00	F	$               1,872.00	$                     8.00	U	$             1,864.00
Maintenance	$                 2,730.00	$             210.00	U	$               2,520.00	$                  30.00	U	$             2,490.00
Wages & Salaries	$                 6,520.00	$             340.00	U	$               6,180.00	$                  20.00	U	$             6,160.00
Depreciation	$                 8,200.00	$                      -	N	$               8,200.00	$                         -	None	$             8,200.00
Rent	$                 2,000.00	$             200.00	U	$               1,800.00	$                         -	None	$             1,800.00
Administrative expense	$                 1,383.00	$             101.00	F	$               1,484.00	$                     1.00	U	$             1,483.00
Total Expenses	$               28,147.00	$         1,051.00	U	$             27,096.00	$                119.00	U	$          26,977.00
Net Operating Income	$               26,243.00	$             419.00	F	$             25,824.00	$                511.00	F	$          25,313.00

--Working for Flexible Budget and Planned Budget

		WORKING COLUMNS					Flexible Budget	Planning Static Budget
Cars washed							8,400	8,300
Revenues				$      6.30			$             52,920.00	$          52,290.00
Expenses:
Cleaning Supplies	(	$                      -	)	$      0.60	x 8400 or 8300		$               5,040.00	$             4,980.00
Electricity	(	$         1,200.00	)	$      0.08	x 8400 or 8300	)	$               1,872.00	$             1,864.00
Maintenance	(	$                      -	+	$      0.30	x 8400 or 8300	)	$               2,520.00	$             2,490.00
Wages & Salaries	(	$         4,500.00	+	$      0.20	x 8400 or 8300	)	$               6,180.00	$             6,160.00
Depreciation	(	$         8,200.00	+	$           -	x 8400 or 8300		$               8,200.00	$             8,200.00
Rent	(	$         1,800.00	)	$           -	x 8400 or 8300		$               1,800.00	$             1,800.00
Administrative expense	(	$         1,400.00	+	$      0.01	x 8400 or 8300	)	$               1,484.00	$             1,483.00
Total Expenses		$      17,100.00		$      1.19			$             27,096.00	$          26,977.00
Net Operating Income							$             25,824.00	$          25,313.00

• Flexible Budget

		WORKING COLUMNS					Flexible Budget - ANSWER
Cars washed							8,300
Revenues				$      6.60			$             54,780.00
Expenses:
Cleaning Supplies	(	$                      -	)	$      0.50	x 8300		$               4,150.00
Electricity	(	$         1,100.00	)	$      0.06	x 8300	)	$               1,598.00
Maintenance	(	$                      -	+	$      0.25	x 8300	)	$               2,075.00
Wages & Salaries	(	$         4,900.00	+	$      0.30	x 8300	)	$               7,390.00
Depreciation	(	$         8,500.00	+	$           -	x 8300		$               8,500.00
Rent	(	$         2,000.00	)	$           -	x 8300		$               2,000.00
Administrative expense	(	$         1,400.00	+	$      0.03	x 8300	)	$               1,649.00
Total Expenses		$      17,900.00		$      1.14			$             27,362.00
Net Operating Income							$             27,418.00