Exercise 9-13 Flexible Budget Performance Report [LO4] Auto Lavage is a Canadian

Question

Exercise 9-13 Flexible Budget Performance Report [LO4] 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's costs Cost per Car Washed $ 0.40 0.06 0.10 0.20 Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $1,400 $4,500 $ 8,500 $ 1,900 1,300 0.01 For example, electricity costs are $1,400 per month plus $0.06 per car washed. The company expects to wash 8,200 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 Revenue 8,300 S50,480 Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 3,780 1,862 1,060 6,500 8,500 2,100 1,282 Total expense 25,084 Net operating income $ 25,396

Explanation / Answer

Auto Lavage   Flexible Budget Performance Report for the month ended October 31. Cost Formula Planning Budget Flexible Budget Actual results Activity Variance=Planning-Flexible budget F/U Revenue & Spending Variance=Flexible budget-Actual   F/U Details Fixed per car washed No of Car washed        8,200              8,300         8,300 Revenue                 5.90      48,380            48,970       50,480           590 F         1,510 F   Expenses Cleaning Supplies               0.40        3,280              3,320         3,780             40 U          460 U Electricity         1,400               0.06        1,892              1,898         1,862               6 U             36 F Maintenance               0.10            820                  830         1,060             10 U          230 U Wages & Salaries         4,500               0.20        6,140              6,160         6,500             20 U          340 U Depreciation         8,500        8,500              8,500         8,500              -                -   Rent         1,900        1,900              1,900         2,100              -            200 U Admin Expenses         1,300               0.01        1,382              1,383         1,282               1 U          101 F Total Expenses      23,914            23,991       25,084             77 U       1,093 U Net Operating Income      24,466            24,979       25,396           513          417 F

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