Question

ch8 exer #3

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	$	1,500		$	0.09
Maintenance				$	0.25
Wages and salaries	$	4,000		$	0.20
Depreciation	$	8,400
Rent	$	2,000
Administrative expenses	$	1,500		$	0.03

  

For example, electricity costs are $1,500 per month plus $0.09 per car washed. The company actually washed 8,000 cars in August. The company expected to collect an average of $6.70 per car washed.

The actual operating results for August appear below.

  

Lavage Rapide Income Statement For the Month Ended August 31
Actual cars washed		8,000
Revenue	$	53,560
Expenses:
Cleaning supplies		6,130
Electricity		2,370
Maintenance		2,600
Wages and salaries		6,520
Depreciation		8,400
Rent		2,000
Administrative expenses		1,820
Total expense		29,840
Net operating income	$	23,720

  

Required:

Prepare a report showing 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 U Expenses: Cleaning supplies U Electricity U Maintenance U Wages and salaries U Depreciation None Rent None Administrative expenses U Total expense U Net operating income U

Answer 1