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: Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost pen Car Washed $0.70 $0.10 $0.15 $0.30 $1,000 $4,180 $8,100 $1,900 $1,700 $0.02 For example, electricity costs are $1,000 per month plus $0.10 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.40 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 $ 53,940 Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expense:s 6,170 1,780 1,455 6,890 8,100 2,100 1,762 Total expense Net operating income $ 25,683 Required Prepare a flexible budget performance report that shows the company's revenue and spending variances and 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.)

Explanation / Answer

FLEXIBLE BUDGET COMPARED WITH ACTUALS PLANNING BUDGET COMPARED WITH ACTUALS actual results fixed cost variable cost total VARIANCE fixed cost variable cost total VARIANCE cars washed 8200 per car 8200 per car 8100 washed washed Revenue 53940 6.4 52480 1460 F 6.4 51840 2100 F Expenses cleaning supplies 6170 0.7 5740 430 U 0.7 5670 500 U electricity 1780 1000 0.1 1820 40 F 1000 0.1 1810 30 F maintenance 1455 0.15 1230 225 U 0.15 1215 240 U wages and salaries 6890 4100 0.3 6560 330 U 4100 0.3 6530 360 U depreciation 8100 8100 8100 0 - 8100 8100 0 - rent 2100 1900 1900 200 U 1900 1900 200 U administration expense 1762 1700 0.02 1864 102 F 1700 0.02 1862 100 F total expense 28257 27214 1043 U 27087 1430 U Net operating income 25683 25266 417 F 24753 670 F FLEXIBLE BUDGET COMPARED WITH ACTUALS PLANNING BUDGET COMPARED WITH ACTUALS actual results fixed cost variable cost total VARIANCE fixed cost variable cost total VARIANCE cars washed 8200 per car 8200 per car 8100 washed washed Revenue 53940 6.4 52480 1460 F 6.4 51840 2100 F Expenses cleaning supplies 6170 0.7 5740 430 U 0.7 5670 500 U electricity 1780 1000 0.1 1820 40 F 1000 0.1 1810 30 F maintenance 1455 0.15 1230 225 U 0.15 1215 240 U wages and salaries 6890 4100 0.3 6560 330 U 4100 0.3 6530 360 U depreciation 8100 8100 8100 0 - 8100 8100 0 - rent 2100 1900 1900 200 U 1900 1900 200 U administration expense 1762 1700 0.02 1864 102 F 1700 0.02 1862 100 F total expense 28257 27214 1043 U 27087 1430 U Net operating income 25683 25266 417 F 24753 670 F FLEXIBLE BUDGET COMPARED WITH ACTUALS PLANNING BUDGET COMPARED WITH ACTUALS actual results fixed cost variable cost total VARIANCE fixed cost variable cost total VARIANCE cars washed 8200 per car 8200 per car 8100 washed washed Revenue 53940 6.4 52480 1460 F 6.4 51840 2100 F Expenses cleaning supplies 6170 0.7 5740 430 U 0.7 5670 500 U electricity 1780 1000 0.1 1820 40 F 1000 0.1 1810 30 F maintenance 1455 0.15 1230 225 U 0.15 1215 240 U wages and salaries 6890 4100 0.3 6560 330 U 4100 0.3 6530 360 U depreciation 8100 8100 8100 0 - 8100 8100 0 - rent 2100 1900 1900 200 U 1900 1900 200 U administration expense 1762 1700 0.02 1864 102 F 1700 0.02 1862 100 F total expense 28257 27214 1043 U 27087 1430 U Net operating income 25683 25266 417 F 24753 670 F FLEXIBLE BUDGET COMPARED WITH ACTUALS PLANNING BUDGET COMPARED WITH ACTUALS actual results fixed cost variable cost total VARIANCE fixed cost variable cost total VARIANCE cars washed 8200 per car 8200 per car 8100 washed washed Revenue 53940 6.4 52480 1460 F 6.4 51840 2100 F Expenses cleaning supplies 6170 0.7 5740 430 U 0.7 5670 500 U electricity 1780 1000 0.1 1820 40 F 1000 0.1 1810 30 F maintenance 1455 0.15 1230 225 U 0.15 1215 240 U wages and salaries 6890 4100 0.3 6560 330 U 4100 0.3 6530 360 U depreciation 8100 8100 8100 0 - 8100 8100 0 - rent 2100 1900 1900 200 U 1900 1900 200 U administration expense 1762 1700 0.02 1864 102 F 1700 0.02 1862 100 F total expense 28257 27214 1043 U 27087 1430 U Net operating income 25683 25266 417 F 24753 670 F

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