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

Question

5 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 Cost per per Month Car Washed points Cleaning supplies Electricity Maintenance $0.70 $0.07 $0.25 $0.30 $1,100 eBook Wages and salaries $4,300 $8,200 $2,000 Adrministrative Print $1,600 $0.03 ReferenCe For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.70 per car washed. The actual operating results for August appear below. Lavage Rapide For the Month Ended August 31 Actual cars vashed B,300 $57 040 Expenses Cleaning supplies 6,240 1,644 2,290 Nages and salaries 7,120 B,200 2,200 Electricity Maintenance Depreciation Administrative 1,746 29,440 Net operating income $27.600 Total expense Prepare a fiexible budget performance report that shows the company's revenue and spending variances and activty 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.) Flexible Budget Performance Report For the Month Ended August 31 Actual Planni Bud Flexible ults 8,300 Cars washed Revenue Expenses: 57,040 Cleaning supplies Electrici Maintenance Wages and salaries De Rent Administrative 6,240 1,644 2,290 7,120 8,200 2,200 1,746 29,440 Total Net operating income $27,600

Explanation / Answer

Activity variance = Flxexible budget          - planned budget where   Flexible budget = fixed cost per month + 8,200*cost per car washed Planned budget = fixed cost per month +8,100*cost per cash washed fixed cost cost per 8,300 8,200 per monht car washed Flexible planned Activity variance Cars washed 8,300 8,200 Revenue 6.7 55610 54940 670 F Expenses Cleaning supplies 0.7 5810 5740 70 U Electricity 1,100 0.07 1681 1674 7 U Maintenance 0.25 2075 2050 25 U Wages and salaries 4,300 0.3 6790 6760 30 U Depreciation 8,200 8,200 8,200 0 N Rent 2,000 2,000 2,000 0 N Administrative expenses 1,600 0.03 1,849 1,846 3 N total expense 17200 1.35 28405 28270 135 U net operating income 27205 26670 535 F Revenue and Spending variance Actual Flexible Revenue & spending Result budget variance Cars washed 8,300 8,300 Revenue 57,040 55610 1,430 F Expenses Cleaning supplies 6,240 5810 430 U Electricity 1,644 1681 37 F Maintenance 2,290 2075 215 U Wages and salaries 7,120 6790 330 U Depreciation 8,200 8,200 0 N Rent 2,200 2,000 200 U Administrative expenses 1,746 1,849 103 F total expense 29,440 28,405 1,035 U net operating income 27,600 27,205 395 F

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