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 Cost per Car Washed per Month Cleaning supplies Electricity $0.70 $0.07 $0.10 $0.20 $1,300 Maintenance $5,000 $8,300 $1,900 $1,300 Wages and salaries Depreciation Rent Administrative expenses $0.01 For example, electricity costs are $1,300 per month plus $0.07 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.20 per car washed. The actual operating results for August appear below.

Answer 1

Solution

Lavage Rapide
Revenues and Spending Variance
For the Month ended August 31
Revenue	$ 1,480.00	F
Expenses:
Cleaning supplies	$ 430.00	U
Electricity	$ 37.00	F
Maintenance	$ 230.00	U
Wages and salaries	$ 340.00	U
Depreciation	$ 0.00	None
Rent	$ 200.00	U
Administrative expenses	$ 101.00	F
Total Expenses	$ 1,062.00	U
Net Operating Income	$ 418.00	F

Working

	Units (A)	Fixed cost (B)	Variable cost per unit ©	Flexible cost and revenue (D=(A x C) +B)
Revenue	8200		$       6.20	$ 50,840.00
Expenses:	8200
Cleaning suplies	8200	$               -	$       0.70	$    5,740.00
Electricity	8200	$ 1,300.00	$       0.07	$    1,874.00
Maintenance	8200	$               -	$       0.10	$        820.00
Wages and salaries	8200	$ 5,000.00	$       0.20	$    6,640.00
Depreciation	8200	$ 8,300.00		$    8,300.00
Rent	8200	$ 1,900.00		$    1,900.00
Administrative expenses	8200	$ 1,300.00	$       0.01	$    1,382.00
Total Expenses				$ 26,656.00
Net Operating Income				$ 24,184.00