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				$	0.80
Electricity	$	1,200		$	0.09
Maintenance				$	0.25
Wages and salaries	$	4,800		$	0.30
Depreciation	$	8,100
Rent	$	2,000
Administrative expenses	$	1,600		$	0.03

For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $5.90 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	$	50,480
Expenses:
Cleaning supplies		7,060
Electricity		1,908
Maintenance		2,290
Wages and salaries		7,620
Depreciation		8,100
Rent		2,200
Administrative expenses		1,746
Total expense		30,924
Net operating income	$	19,556

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 U Administrative expenses F Total expense U Net operating income F

Answer 1