avage Rapide is a Canadian company that owns and operates a large automatic carw

Question

avage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,300 per month plus $0.09 per car washed. The company expected to wash 8,400 cars in August and to collect an average of $6.10 per car washed.

The actual operating results for August appear below.

  

Required:

Compute 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.)

Fixed Cost
per Month Cost per
Car Washed

Explanation / Answer

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Lavage Rapide Revenue and Spending Variances For the Month Ended August 31 Actual Flexible Variance F/U Revenue $53,340.00 $ 51,240.00 $    2,100.00 F Expenses: Cleaning supplies $ 5,540.00 $ 5,040.00 $        500.00 U Electricity $ 2,026.00 $ 2,056.00 $        (30.00) F Maintenance $ 2,340.00 $ 2,100.00 $        240.00 U Wages and salaries $ 7,040.00 $ 6,680.00 $        360.00 U Depreciation $ 8,200.00 $ 8,200.00 $                 -   Rent $ 2,100.00 $ 1,900.00 $        200.00 U Administrative expenses $ 1,936.00 $ 2,036.00 $     (100.00) F Total expense $29,182.00 $ 28,012.00 $    1,170.00 U Net operating income $24,158.00 $ 23,228.00 $        930.00 U Calculation of Flexible Budget Fixed Cost rate Flexible Budget (8400) Revenue $            6.10 $ 51,240.00 Expenses: Cleaning supplies $            0.60 $    5,040.00 Electricity $   1,300.00 $            0.09 $    2,056.00 Maintenance $            0.25 $    2,100.00 Wages and salaries $   5,000.00 $            0.20 $    6,680.00 Depreciation $   8,200.00 $    8,200.00 Rent $   1,900.00 $    1,900.00 Administrative expenses $   1,700.00 $            0.04 $    2,036.00 Total expense $ 28,012.00 Net operating income $ 23,228.00

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