Exercise 9-14 Prepare a Flexible Budget Performance Report [LO9-4] Lavage Rapide

Question

Exercise 9-14 Prepare a Flexible Budget Performance Report [LO9-4] 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 $0.10 $0.25 $0.40 $1,400 $4,900 $8,200 $2,100 1,700 $0.01 For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.00 per car washed The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,400 Revenue $ 51,900 Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 7,140 2,200 2,315 8,580 8,200 2,300 1, 683 32,418 19,482 Total expense Net operating income

Explanation / Answer

Lavage Rapide Flexible Budget Performance Report For the Month Ended August 31 Actual Results Revenue and Spending Variance Flexible Budget Activity Variance Planning Budget Cars washed 8400 8400 8300 Revenue 51900 1500 F 50400 600 F 49800 Expenses: Cleaning supplies 7140 420 U 6720 80 U 6640 Electricity 2200 40 F 2240 10 U 2230 Maintenance 2315 215 U 2100 25 U 2075 Wages and salaries 8580 320 U 8260 40 U 8220 Depreciation 8200 0 None 8200 0 None 8200 Rent 2300 200 U 2100 0 None 2100 Administrative expenses 1683 101 F 1784 1 U 1783 Total expense 32418 1014 U 31404 156 U 31248 Net operating income 19482 486 F 18996 444 F 18552

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