Question

Exercise 9-13 Revenue and Spending Variances [LO9-3]

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	$	1,200		$	0.08
Maintenance				$	0.25
Wages and salaries	$	4,300		$	0.20
Depreciation	$	8,400
Rent	$	1,800
Administrative expenses	$	1,400		$	0.03

For example, electricity costs are $1,200 per month plus $0.08 per car washed. The company expects to wash 8,400 cars in August and to collect an average of $6.60 per car washed.

The actual operating results for August appear below.

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,500
Revenue	$	57,540
Expenses:
Cleaning supplies		7,220
Electricity		1,842
Maintenance		2,340
Wages and salaries		6,340
Depreciation		8,400
Rent		2,000
Administrative expenses		1,552
Total expense		29,694
Net operating income	$	27,846

Required:

Calculate the company's 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 is not complete.

Lavage Rapide Revenue and Spending Variances For the Month Ended August 31 Revenue $1,440selected answer correct F Expenses: Cleaning supplies 420 selected answer correct U Electricity 38 selected answer correct F Maintenance 215 selected answer correct U Wages and salaries 340 selected answer correct U Depreciation 0 selected answer correct None Rent 200 selected answer correct U Administrative expenses 103 selected answer correct F Total expense 1,316 INCORRECT INCORRECT Net operating income $124 INCORRECT F

The ones in bold are the answers that I keep getting. If you could show how to get the three answers in bold please.

Answer 1

Total expense variance = Flexible - Actual

= [(0.80+0.08+0.25+0.20+0.03)*8500] + 1200+4300 + 8400 +1800+1400 - 29,694

= 1034 U

Net operating income = 1440 F + 1034 U

= 406 F

Comment if you face any issues