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:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.50
Electricity	$	1,100		$	0.08
Maintenance				$	0.15
Wages and salaries	$	4,400		$	0.40
Depreciation	$	8,100
Rent	$	2,200
Administrative expenses	$	1,600		$	0.02

For example, electricity costs are $1,100 per month plus $0.08 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.50 per car washed.

The actual operating results for August are as follows:

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,300
Revenue	$	55,400
Expenses:
Cleaning supplies		4,600
Electricity		1,726
Maintenance		1,470
Wages and salaries		8,040
Depreciation		8,100
Rent		2,400
Administrative expenses		1,664
Total expense		28,000
Net operating income	$	27,400

Required:

Calculate 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.)

Lavage Rapide
Revenue and Spending Variances
For the Month Ended August 31
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income

Answer 1

Calculate 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.)

	Lavage Rapide Revenue and Spending Variances For the Month Ended August 31 Revenue (8300*6.5-55400) 1450 F Expenses: Cleaning supplies (4150-4600) 450 U Electricity (1764-1726) 38 F Maintenance (1245-1470) 225 U Wages and salaries (7720-8040) 320 U Depreciation 0 None Rent 200 U Administrative expenses (1766-1664) 102 F Total expense 1055 U Net operating income 395 F