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				$	0.70
Electricity	$	1,200		$	0.09
Maintenance				$	0.25
Wages and salaries	$	4,800		$	0.20
Depreciation	$	8,000
Rent	$	2,100
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 8,400 cars in August and to collect an average of $6.20 per car washed.

  

The actual operating results for August appear below.

  

Lavage Rapide Income Statement For the Month Ended August 31
Actual cars washed		8,500
Revenue	$	54,180
Expenses:
Cleaning supplies		6,380
Electricity		1,926
Maintenance		2,340
Wages and salaries		6,840
Depreciation		8,000
Rent		2,300
Administrative expenses		1,752
Total expense		29,538
Net operating income	$	24,642

Required:

Complete the flexible budget performance report that shows the company’s activity variances and 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.)

Complete the flexible budget performance report that shows the company’s activity variances and 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.)

Complete the flexible budget performance report that shows the company’s activity variances and 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.)

Complete the flexible budget performance report that shows the company’s activity variances and 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.)

Complete the flexible budget performance report that shows the company’s activity variances and 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	Revenue and spending variances	Revenue and Spending Variances	Activity Variances	Activity Variances
Expenses :
Cleaning Supplies	No need to fill	No need to fill	No need to fill	No need to fill
Electricity
Maintenance
Wages and Salaries
Depreciation
Rent
Administrative Expenses
Total Expenses
Net Operating Income

Answer 1

Lavage Rapide
Flexible Budget Performance Report
For the month ended August 31
	Actual Results	Revenue and Spending Variance		Flexible Budget	Activity Variance		Planning Budget
Expected No. of car wash	8500			8500			8400
Revenue	54180	1,480	F	52700	620	F	52080
Expenses:
Cleaning Supplies	6380	430	U	5950	70	U	5880
Electricity	1926	39	F	1965	9	U	1956
Maintenance	2340	215	U	2125	25	U	2100
Wages and Salary	6840	340	U	6500	20	U	6480
Depreciation	8000	-	None	8000	-	None	8000
Rent	2300	200	U	2100	-	None	2100
Administrative Expense	1752	103	F	1855	3	U	1852
Total Expense	29538	1,043	U	28495	127	U	28368
Net Operating Income	24642	437	F	24205	493	F	23712