Question

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
Cleaning Supplies		.40
Electricity	1,100	.07
Maintenance		.15
Wages And Salary	4,700	.30
Depreciation	8,300
Rent	2,000
Admin Exp.	1,600	.05

For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expected to wash 8,200 cars in August and to collect an average of $6.60 per car washed. The company actually washed 8,300 cars.

The actual operating results for August appear below.

  

Lavage Rapide Income Statement For the Month Ended August 31
Actual cars washed		8,300
Revenue	$	56,220
Expenses:
Cleaning supplies		3,780
Electricity		1,644
Maintenance		1,470
Wages and salaries		7,520
Depreciation		8,300
Rent		2,200
Administrative expenses		1,910
Total expense		26,824
Net operating income	$	29,396

Compute the company's activity 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

Answer-

Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8300 car washed*$6.60 per car washed	54780	56220	1440	Favourable
Less:-Expenses
Cleaning expenses	8300 car washed*$.40 per car washed	3320	3780	-460	Unfavourable
Electricity	(8300 car washed*$.07 per car washed)+$1100	1681	1644	37	Favourable
Maintenance	8300 car washed*$.15 per car washed	1245	1470	-225	Unfavourable
Wages & salaries	(8300 car washed*$.30 per car washed)+$4700	7190	7520	-330	Favourable
Depreciation		8300	8300	0	None
Rent		2000	2200	-200	Unfavourable
Administrative expenses	(8300 car washed*$.05 per car washed)+$1600	2015	1910	105	Favourable
Income from operations		29029	29396	367	Favourable