Lavage Kapiae is aanadian company tnat owns ana operates a large automatic car w

ID: 2561384 • Letter: L

Question

Lavage Kapiae is aanadian company tnat owns ana operates a large automatic car wasn Taclllty near Montreal. I ne TOllowing tape provides data concerning the company's costs: Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.70 $0.05 0.15 $0.30 $1,100 $4,000 $8,300 $2,000 $1,600 $0.01 For example, electricity costs are $1,100 per month plus $0.05 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.50 per car washed The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,100 Revenue $ 54,100 Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 6,100 1,470 1,440 6,760 8,300 2,200 1,580 Total expense Net operating income $ 26,250

Explanation / Answer

Solution:

Lavage Repide

Flexible Budget Performance Report

For the Month Ended August 31

Actual Result

Spending Variance

Flexible Budget

Activity Variance

Planning Budget

Car washed

8100

8000

Revenues

$54,100

$1,450

$52,650

$650

$52,000

Expenses:

Cleaning supplies

$6,100

$430

$5,670

$70

$5,600

Electricity

$1,470

$35

$1,505

$1,500

Maintenance

$1,440

$225

$1,215

$15

$1,200

Wages and salaries

$6,760

$330

$6,430

$30

$6,400

Depreciation

$8,300

Rent

$2,200

$200

$2,000

Administrative expense

$1,580

$101

$1,681

$1,680

Total expenses

$27,850

$1,049

$26,801

$121

$26,680

Net operating income

$26,250

$401

$25,849

$529

$25,320

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