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 carwash facility near Montreal. The following table provides data concerning the company's costs Fixed Cost per Month Cost per Car Washed Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $ 0.60 $ 0.09 $ 0.10 $ 0.30 $ 1,400 $ 4,600 $ 8,400 $ 2,100 $ 1,500 S 0.05 For example, electricity costs are $1,400 per month plus $0.09 per car washed. The company expected to wash 8,300 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 Revenue 8,400 $ 56,050 Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 5,480 2,117 1,070 7,450 8,400 2,300 1,815 Total expense 28,632 Net operating income S 27,418 Required Compute 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.)

Explanation / Answer

Actual results Revenue and spending variances Flexible budget Cars washed 8400 8400 Revenue 56050 1450 F 54600 Expenses: Cleaning supplies 5480 440 U 5040 Electricity 2117 39 F 2156 Maintenance 1070 230 U 840 Wages and salaries 7450 330 U 7120 Depreciation 8400 0 None 8400 Rent 2300 200 U 2100 Administrative expenses 1815 105 F 1920 Total expense 28632 1056 U 27576 Net operating income 27418 394 F 27024

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