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				$	0.80
Electricity	$	1,100		$	0.07
Maintenance				$	0.30
Wages and salaries	$	4,900		$	0.20
Depreciation	$	8,100
Rent	$	1,800
Administrative expenses	$	1,300		$	0.05

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		7,060
Electricity		1,644
Maintenance		2,700
Wages and salaries		6,900
Depreciation		8,100
Rent		2,000
Administrative expenses		1,610
Total expense		30,014
Net operating income	$	26,206

Required:

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.)

	Lavage Rapide Activity Variances For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income

Answer 1