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:

For example, electricity costs are $1,500 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.40 per car washed. The company actually washed 8,600 cars in August.

Required:

Calculate the company's 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.)

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.60 Electricity $ 1,500 $ 0.07 Maintenance $ 0.25 Wages and salaries $ 4,600 $ 0.30 Depreciation $ 8,100 Rent $ 2,100 Administrative expenses $ 1,400 $ 0.04

Explanation / Answer

Planning budget Flexible budget Activity variances Revenue 54400 55040 640 F Expenses: Cleaning supplies 5100 5160 60 U Electricity 2095 2102 7 U Maintenance 2125 2150 25 U Wages and salaries 7150 7180 30 U Depreciation 8100 8100 0 None Rent 2100 2100 0 None Administrative expenses 1740 1744 4 U Total Expenses 28410 28536 126 U Net operating income(loss) 25990 26504 514 F

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.