Auto Lavage is a Canadian company that owns and operates a large automatic carwa
ID: 2374109 • Letter: A
Question
Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the company%u2019s costs:
For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expects to wash 8,000 cars in October and to collect an average of $5.90 per car washed.
Compute the company's revenue and spending variances for October. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the company%u2019s costs:
Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.70 Electricity $ 1,400 $ 0.10 Maintenance $ 0.30 Wages and salaries $ 4,700 $ 0.40 Depreciation $ 8,300 Rent $ 2,100 Administrative expenses $ 1,800 $ 0.05
For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expects to wash 8,000 cars in October and to collect an average of $5.90 per car washed.
The actual operating results for October appear below:
Auto Lavage
Income Statement
For the Month Ended October 31 Actual cars washed 8,100 Revenue $ 49,300 Expenses: Cleaning supplies 6,100 Electricity 2,170 Maintenance 2,640 Wages and salaries 8,260 Depreciation 8,300 Rent 2,300 Administrative expenses 2,100 Total expense 31,870 Net operating income $ 17,430
Required:
Compute the company's revenue and spending variances for October. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
Auto Lavage
Revenue and Spending Variances
For the Month Ended October 31 Revenue $ Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income $
Explanation / Answer
Auto Lavage
Revenue and Spending Variances
For the Month Ended October 31
Flexible Budget
Actual Results
Revenue and Spending Variances
Cars washed (q)...........................
8,100
8,100
Revenue ($5.90q)........................
$47,790
$49,300
$1,510
F
Expenses:
Cleaning supplies ($0.70q).........
5,670
6,100
430
U
Electricity ($1,400 + $0.10q)....
2,210
2,170
40
F
Maintenance ($0.30q)...............
2,430
2,640
210
U
Wages and salaries
($4,700 + $0.40q).................
7,940
8,260
320
U
Depreciation ($8,300)...............
8,300
8,300
0
Rent ($2,100)...........................
2,100
2,300
200
U
Administrative expenses
($1,800 + $0.05q).................
2,205
2,100
105
F
Total expense..............................
30,855
31,870
1,015
U
Net operating income...................
$16,935
$17,430
$ 495
F
Auto Lavage
Revenue and Spending Variances
For the Month Ended October 31
Flexible Budget
Actual Results
Revenue and Spending Variances
Cars washed (q)...........................
8,100
8,100
Revenue ($5.90q)........................
$47,790
$49,300
$1,510
F
Expenses:
Cleaning supplies ($0.70q).........
5,670
6,100
430
U
Electricity ($1,400 + $0.10q)....
2,210
2,170
40
F
Maintenance ($0.30q)...............
2,430
2,640
210
U
Wages and salaries
($4,700 + $0.40q).................
7,940
8,260
320
U
Depreciation ($8,300)...............
8,300
8,300
0
Rent ($2,100)...........................
2,100
2,300
200
U
Administrative expenses
($1,800 + $0.05q).................
2,205
2,100
105
F
Total expense..............................
30,855
31,870
1,015
U
Net operating income...................
$16,935
$17,430
$ 495
F
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