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 $1,000 per month plus $0.09 per car washed. The company expected to wash 8,000 cars in August and to collect an average of $6.90 per car washed. The company actually washed 8,100 cars in August.

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 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:

Explanation / Answer

company actually washed = 8,100 cars

company expected to wash = 8,000 cars

Fixed Cost + Variable cost = Total

A)   Cleaning supplies = 0 + 0.80 * (8100-8000) = 80 U

B) Electricity     = 1000 +    0.09* (8100-8000) = 1009 U

C) Maintenance = 0 + .20 * (8100-8000) = 20 U

D) Wages and salaries= 4200 + .30 *  (8100-8000) = 4230 U

E) Depreciation = 8300 + 0 = 8300

F) Rent = 2100 + 0 = 2100

G) Administrative expenses= 1500 + .05*  (8100-8000)= 1505 u

Variable cost varinace = 144U

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