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 $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 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.)

QUESTION IS: WAGES AND SALARIES

Fixed Cost
per Month Cost per
Car Washed Cleaning supplies $ 0.80 Electricity $ 1,200 $ 0.15 Maintenance $ 0.20 Wages and salaries $ 5,000 $ 0.30 Depreciation $ 6,000 Rent $ 8,000 Administrative expenses $ 4,000 $ 0.10

Explanation / Answer

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

Revenue 40 U Expense Electricity 520 U Maintenance 150 U Maintenance 500 U Wages and Salaries 860 U Depreciation None Rent None Administrative expenses 70 U Total Expenses 2100 U Net Operating Income 2140 U

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