Lavage Rapide is a Canadian company that owns and operates a large automatic car
ID: 2565403 • Letter: L
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 $1,000 per month plus $0.09 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.40 per car washed.
The actual operating results for August appear below.
Required:
Prepare a flexible budget performance report that shows the company’s revenue and spending variances and 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 Costper Month Cost per
Car Washed Cleaning supplies $ 0.40 Electricity $ 1,000 $ 0.09 Maintenance $ 0.10 Wages and salaries $ 4,800 $ 0.30 Depreciation $ 8,500 Rent $ 1,800 Administrative expenses $ 1,400 $ 0.03 Lavage Rapide Flexible Budget Performance Report For the Month Ended August 31 Actual Results Flexible Budget 8.200 Planning Budget 8,100 Cars washed 8,200 Revenue $ 53,940 $1,460F $ 52,480 Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 3,740 1,699 1,050 7,590 8,500 2,000 1,543 26,122 $ 27,818 None None None Total expense Net operating income
Explanation / Answer
Actual results Revenue and spending variances Flexible budget Activity variances Planning budget Cars washed 8200 8200 8100 Revenue 53940 1460 F 52480 640 F 51840 Expenses: Cleaning supplies 3740 460 U 3280 40 U 3240 Electricity 1699 39 F 1738 9 U 1729 Maintenance 1050 230 U 820 10 U 810 Wages and salaries 7590 330 U 7260 30 U 7230 Depreciation 8500 0 None 8500 0 None 8500 Rent 2000 200 U 1800 0 None 1800 Administrative expenses 1543 103 F 1646 3 U 1643 Total expense 26122 1078 U 25044 92 U 24952 Net operating income 27818 382 F 27436 548 F 26888
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