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:

For example, electricity costs are $1,400 per month plus $0.06 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.

Required:

Calculate the company's revenue and spending 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.)

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.60 Electricity $ 1,400 $ 0.06 Maintenance $ 0.10 Wages and salaries $ 5,000 $ 0.40 Depreciation $ 8,100 Rent $ 2,100 Administrative expenses $ 1,300 $ 0.05

Explanation / Answer

Calculate the company's revenue and spending variances for August.

Revenue 1430 F Expenses Cleaning supplies 440 U Electricity 36 F Maintenance 230 U Wages and salaries 320 U Depreciation None Rent 200 U Administrative expenses 105 F Total expense 1049 U Net operating income 381 F

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