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: Cost per Car Washed S 0.40 S 0.07 S 0.25 S 0.30 Fixed Cost per Month Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent 1.100 $ 4,300 5 8,300 S 1.800 5 1.700 S 0.03 For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expected to wash 8,100 cars in August and to collect an average of $8.30 per car washed. The company actually washed 8,200 cars in August. Required: Compute 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.) Lavage Rapide For the Month Ended August 31 Cleaning supplies Electricity Maintenance Wages and salaries Rent Total expense Net operating income

Explanation / Answer

CALCULATE ACTIVITY VARIANCE :

Planning budget Flexible budget activity variance Revenue 51030 51660 630 F Expenses Cleaning supplies 3240 3280 40 U Electricity 1667 1674 7 U Maintenance 2025 2050 25 U Wages and salaries 6730 6760 30 U Depreciation 8300 8300 None Rent 1800 1800 None Administrative expenses 1943 1946 3 U Total expenses 25705 25810 105 U Net operating income 25325 25850 525 F

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