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 $1,200 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.se $0.15 $0.20 $0.30 $5,000 $6,000 $8,000 $4,000 $0.10 For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 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 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 7,560 2,678 2,260 8,500 6,000 8,000 4.950 39,940 3,140 $

Answer 1

Solution

Lavage Rapide
Revenues and Spending Variance
For the Month ended August 31
Revenue	$ 40.00	U
Expenses:
Cleaning supplies	$ 520.00	U
Electricity	$ 150.00	U
Maintenance	$ 500.00	U
Wages and salaries	$ 860.00	U
Depreciation	$ 0.00	None
Rent	$ 0.00	None
Administrative expenses	$ 70.00	U
Total Expenses	$ 2,100.00	U
Net Operating Income	$ 2,140.00	U

Working

	Units (A)	Fixed cost (B)	Variable cost per unit ©	Flexible cost and revenue (D=(A x C) +B)
Revenue	8800		$          4.90	$     43,120.00
Expenses:	8800
Cleaning suplies	8800		$          0.80	$       7,040.00
Electricity	8800	$    1,200.00	$          0.15	$       2,520.00
Maintenance	8800		$          0.20	$       1,760.00
Wages and salaries	8800	$    5,000.00	$          0.30	$       7,640.00
Depreciation	8800	$    6,000.00		$       6,000.00
Rent	8800	$    8,000.00		$       8,000.00
Administrative expenses	8800	$    4,000.00	$          0.10	$       4,880.00
Total Expenses				$     37,840.00
Net Operating Income				$       5,280.00