Question

# Exercise 9-13 Revenue and Spending Variances [LO9-3] Lavage Rapide is a Canadian company that owns and...

Exercise 9-13 Revenue and Spending Variances [LO9-3]

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 \$ 0.60 Electricity \$ 1,100 \$ 0.06 Maintenance \$ 0.30 Wages and salaries \$ 4,500 \$ 0.30 Depreciation \$ 8,100 Rent \$ 1,800 Administrative expenses \$ 1,300 \$ 0.04

For example, electricity costs are \$1,100 per month plus \$0.06 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.

 Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,500 Revenue \$ 59,220 Expenses: Cleaning supplies 5,540 Electricity 1,574 Maintenance 2,760 Wages and salaries 7,380 Depreciation 8,100 Rent 2,000 Administrative expenses 1,536 Total expense 28,890 Net operating income \$ 30,330

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.)

Solution: