Question

Lavado Rapido is a Mexican company that owns and operates a large automatic car wash facility near Mexico City. The following table provides data concerning the company’s costs:

[Fixed Cost per Month] [Cost per Car Washed]

Cleaning supplies $1.10

Electricity $1,500 $0.20

Maintenance $0.35

Wages and salaries $6,500 $0.80

Depreciation $6,000

Rent $9,500

Administrative expenses $3,500 $0.20

The company actually washed 10,000 cars in October and expected to collect an average of $5.50 per car washed. The company reported the following actual results.

Actual Results

Revenue 75,000

Cleaning Supplies 12,000

Electricity 3,000

Maintenance 4,500

Wages and salaries 16,500

Depreciation 6,000

Rent 9,500

Administrative Expenses 7,800

Required: Prepare the company’s flexible budget and variances for October.

This is all the information I was given, I wasn't given a planned wash amount.

Answer 1

Flexible Budget
	Fixed	Variable	Total	Actual	Variance
Revenue			$        55,000.00	$         75,000.00	$ 20,000.00	F
Expenses
Cleaning Supplies		$        11,000.00	$        11,000.00	$         12,000.00	$   1,000.00	U
Electricity	$      1,500.00	$          2,000.00	$          3,500.00	$            3,000.00	$     -500.00	F
Maintenance		$          3,500.00	$          3,500.00	$            4,500.00	$   1,000.00	U
Wages and Salaries	$      6,500.00	$          8,000.00	$        14,500.00	$         16,500.00	$   2,000.00	U
Depreciation	$      6,000.00		$          6,000.00	$            6,000.00	$               -
Rent	$      9,500.00		$          9,500.00	$            9,500.00	$               -
Administrative Expenses	$      3,500.00	$          2,000.00	$          5,500.00	$            7,800.00	$   2,300.00	U
Total Expenses			$        53,500.00	$         59,300.00	$   5,800.00	U
Income			$          1,500.00	$         15,700.00	$ 14,200.00	F