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	$	1,400		$	0.09
Maintenance				$	0.20
Wages and salaries	$	4,700		$	0.40
Depreciation	$	8,000
Rent	$	1,800
Administrative expenses	$	1,600		$	0.04

For example, electricity costs are $1,400 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.50 per car washed.

The actual operating results for August appear below.

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,400
Revenue	$	56,050
Expenses:
Cleaning supplies		4,650
Electricity		2,117
Maintenance		1,900
Wages and salaries		8,380
Depreciation		8,000
Rent		2,000
Administrative expenses		1,832
Total expense		28,879
Net operating income	$	27,171

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		F
Expenses:
Cleaning supplies		U
Electricity		F
Maintenance		U
Wages and salaries		U
Depreciation	0	None
Rent	200	U
Administrative expenses		F
Total expense		U
Net operating income		F

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	1450	F
Expenses:
Cleaning supplies	450	U
Electricity	39	F
Maintenance	220	U
Wages and salaries	320	U
Depreciation	0	None
Rent	200	U
Administrative expenses	104	F
Total expense	1047	U
Net operating income	403	F