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 points $1,100 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed se.se se.le $e. 2e $0.40 eBook $4,700 $8.300 $1,900 $1,500 $0.03 Print For example, electricity costs are $1,100 per month plus $0.10 per car washed. The company expects to wash 8.500 cars in August and to collect an average of $6.10 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, 680 $ 53,950 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 7,380 1.920 1,940 8,460 8.380 2,180 1.655 31,675 $ 22,275 Required: Calculate the company's revenue and spending variances for August. (Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero varlance). Input all amounts as positive values.) 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 Total expense Net operating income

Answer 1

Solution

Lavage Rapide
Revenues and Spending Variance
For the Month ended August 31
Revenue	$ 1,490.00	F
Expenses:
Cleaning supplies	$ 420.00	U
Electricity	$ 40.00	F
Maintenance	$ 220.00	U
Wages and salaries	$ 320.00	U
Depreciation	$ 0.00	None
Rent	$ 200.00	U
Administrative expenses	$ 103.00	F
Total Expenses	$ 1,017.00	U
Net Operating Income	$ 473.00	F

Working

	Units (A)	Fixed cost (B)	Variable cost per unit ©	Flexible cost and revenue (D=(A x C) +B)
Revenue	8600	$                 -	$          6.10	$     52,460.00
Expenses:	8600
Cleaning supplies	8600		$          0.80	$       6,880.00
Electricity	8600	$    1,100.00	$          0.10	$       1,960.00
Maintenance	8600		$          0.20	$       1,720.00
Wages and salaries	8600	$    4,700.00	$          0.40	$       8,140.00
Depreciation	8600	$    8,300.00		$       8,300.00
Rent	8600	$    1,900.00		$       1,900.00
Administrative expenses	8600	$    1,500.00	$          0.03	$       1,758.00
Total Expenses				$     30,658.00
Net Operating Income				$     21,802.00