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	$	1,100		$	0.06
Maintenance				$	0.25
Wages and salaries	$	4,800		$	0.20
Depreciation	$	8,100
Rent	$	2,000
Administrative expenses	$	1,800		$	0.03

For example, electricity costs are $1,100 per month plus $0.06 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.60 per car washed.

The actual operating results for August are as follows:

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,400
Revenue	$	56,880
Expenses:
Cleaning supplies		5,480
Electricity		1,568
Maintenance		2,315
Wages and salaries		6,820
Depreciation		8,100
Rent		2,200
Administrative expenses		1,949
Total expense		28,432
Net operating income	$	28,448

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. Do not round intermediate calculations.)

Lavage Rapide Revenue and Spending 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