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 $ 0.60 Electricity $ 1,500 $ 0.07 Maintenance $ 0.25 Wages and salaries $ 5,000 $ 0.30 Depreciation $ 8,400 Rent $ 2,100 Administrative expenses $ 1,600 $ 0.05 For example, electricity costs are $1,500 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.10 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,300 Revenue $ 52,120 Expenses: Cleaning supplies 5,420 Electricity 2,044 Maintenance 2,290 Wages and salaries 7,820 Depreciation 8,400 Rent 2,300 Administrative expenses 1,910 Total expense 30,184 Net operating income $ 21,936 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.)

Answer 1

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.)

	Revenue and spending variance
Revenue	1490 F
Expenses
Cleaning supplies	440 U
Electricity	37 F
Maintenance	215 U
Wages and salaries	330 U
Depreciation	0 None
Rent	200 U
Administrative expense	105 F
Total expense	1043 U
Net operating income	447 F