Lavage Rapide is a Canadian company that owns and operates a large automatic car

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:

For example, electricity costs are $1,100 per month plus $0.09 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 company actually washed 8,500 cars in August.

Required:

Calculate the company's activity 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 Cleaning supplies $ 0.70 Electricity $ 1,100 $ 0.09 Maintenance $ 0.10 Wages and salaries $ 4,800 $ 0.30 Depreciation $ 8,300 Rent $ 2,000 Administrative expenses $ 1,500 $ 0.02 Lavage Rapide Activity Variances For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income

Explanation / Answer

Activity variance :

Revenue 660 F expenses Cleaning supplies 70 U Electricity 9 U Maintenance 10 U Wages and salaries 30 U Depreciation 0 None Rent 0 None Administrative expense 2 U Total expense 121 U Net operating income 539 F

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