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:

For example, electricity costs are $1,200 per month plus $0.10 per car washed. The company expects to wash 8,400 cars in August and to collect an average of $6.80 per car washed.

The actual operating results for August appear below.

Required:

Complete the flexible budget performance report that shows the company’s activity variances and 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.)

Fixed Cost per Month Cost per Car Washed Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 0.40 0.10 $0.20 0.30 $1,200 $4,400 $8,100 $2,000 $1,700 0.03

Explanation / Answer

8,500 8,500 8,400 Flexible Budget Perofrmance Report Actual Revenue & Spending Flexible Activity variance Static Variance budget budget Revenues 59,220 1,420 F 57800 680 F 57120 Expenses Cleaning supplies 3,860 460 U 3400 40 U 3360 Electricity 2,010 40 F 2050 10 U 2040 Maintenance 1,920 220 U 1700 20 U 1680 Wages and salaries 7,280 330 U 6950 30 U 6920 Depreciation 8,100 0 N 8,100 0 N 8,100 Rent 2,200 200 U 2,000 0 N 2,000 Administrative expenses 1,852 103 F 1955 0 N 1952 total expense 27222 1067 U 26155 103 U 26052 net operating income 31,998 353 F 31645 577 F 31068

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