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:
Fixed Cost per Month |
Cost per Car Washed |
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Cleaning supplies | $ | 0.50 | |||
Electricity | $ | 1,300 | $ | 0.10 | |
Maintenance | $ | 0.15 | |||
Wages and salaries | $ | 4,300 | $ | 0.40 | |
Depreciation | $ | 8,500 | |||
Rent | $ | 2,000 | |||
Administrative expenses | $ | 1,400 | $ | 0.05 | |
For example, electricity costs are $1,300 per month plus $0.10 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.00 per car washed.
The actual operating results for August appear below.
Lavage Rapide Income Statement For the Month Ended August 31 |
||
Actual cars washed | 8,200 | |
Revenue | $ | 50,700 |
Expenses: | ||
Cleaning supplies | 4,550 | |
Electricity | 2,080 | |
Maintenance | 1,455 | |
Wages and salaries | 7,900 | |
Depreciation | 8,500 | |
Rent | 2,200 | |
Administrative expenses | 1,705 | |
Total expense | 28,390 | |
Net operating income | $ | 22,310 |
NEED TO FILL IN:
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.)
Revenue and Spending Variances Activity Variances
Revenue
Expenses:Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income
Actual | Revenue and spending variances | Flexible budget | Activity variances | Planning budget | |||
Cars washed | 8200 | 8200 | 8100 | ||||
Revenue | 50700 | 1500 | F | 49200 | 600 | F | 48600 |
Expenses: | |||||||
Cleaning supplies | 4550 | 450 | U | 4100 | 50 | U | 4050 |
Electricity | 2080 | 40 | F | 2120 | 10 | U | 2110 |
Maintenance | 1455 | 225 | U | 1230 | 15 | U | 1215 |
Wages and salaries | 7900 | 320 | U | 7580 | 40 | U | 7540 |
Depreciation | 8500 | 0 | None | 8500 | 0 | None | 8500 |
Rent | 2200 | 200 | U | 2000 | 0 | None | 2000 |
Administrative expenses | 1705 | 105 | F | 1810 | 5 | U | 1805 |
Total expenses | 28390 | 1050 | U | 27340 | 120 | U | 27220 |
Net operating income | 22310 | 450 | F | 21860 | 480 | F | 21380 |
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