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 Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,500 $ 0.08 Maintenance $ 0.10 Wages and salaries $ 4,400 $ 0.30 Depreciation $ 8,400 Rent $ 2,000 Administrative expenses $ 1,600 $ 0.05 For example, electricity costs are $1,500 per month plus $0.08 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.70 per car washed. The actual operating results for August are as follows:

The actual operating results for August are as follows:

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,300
Revenue	$	57,040
Expenses:
Cleaning supplies		7,060
Electricity		2,126
Maintenance		1,060
Wages and salaries		7,220
Depreciation		8,400
Rent		2,200
Administrative expenses		1,910
Total expense		29,976
Net operating income	$	27,064

Required:

Calculate the company's revenue and spending variances for August.

Answer 1

Lavage rapide
For the month ended August 31
	Flexible budget	Actual	Revenue and spending variance
Revenue	55610	57040	1430	F
Expenses :
Cleaning supplies	6640	7060	420	U
Electricity	2164	2126	38	F
Maintenance	830	1060	230	U
Wages and salaries	6890	7220	330	U
Depreciation	8400	8400	0	None
Rent	2000	2200	200	U
Administrative expenses	2015	1910	105	F
Total expense	28939	29976	1037	U
Net operating income	26671	27064	393	F