Exercise 9-13 Revenue and Spending Variances [LO9-3] Lavage Rapide is a Canadian

Question

Exercise 9-13 Revenue and Spending Variances [LO9-3] 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 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.80 $0.06 $0.30 $0.30 $1,400 $4,100 $8,100 $1,900 $1,300 $0.05 For example, electricity costs are $1,400 per month plus $0.06 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $5.90 per car washed The actual operating results for August appear below Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,200 Revenue $ 49,890 Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 6,980 1,856 2,670 6,890 8,100 2,100 1,605 30.201 $19,689 Total expense Net operating income

Explanation / Answer

Flexible budget :

Revenue (8200*5.9-49890) 1510 F Expense Cleaning supplies (8200*.80-6980) 420 U Electricity (8200*.06+1400-1856) 36 F Maintenance (8200*.30-2670) 210 U Wages and salaries (8200*.30+4100-6890) 330 U Depreciation (8100-8100) None Rent (1900-2100) 200 U Administrative expenses (8200*.05+1300-1605) 105 F Total expense 1019 U Net operating income 491 F

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