Question

Exercise 9-14 (Algo) Prepare a Flexible Budget Performance Report [LO9-4] 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 $ 0.10 Maintenance $ 0.15 Wages and salaries $ 4,900 $ 0.30 Depreciation $ 8,100 Rent $ 2,200 Administrative expenses $ 1,800 $ 0.03 For example, electricity costs are $1,100 per month plus $0.10 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.00 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 8,300 Revenue $ 51,300 Expenses: Cleaning supplies 5,420 Electricity 1,890 Maintenance 1,470 Wages and salaries 7,720 Depreciation 8,100 Rent 2,400 Administrative expenses 1,946 Total expense 28,946 Net operating income $ 22,354 Required: Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity 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.)

Answer 1

Answer-

LAVAGE RAPIDE
FLEXIBLE BUDGET PERFORMANCE REPORT
FOR THE MONTH ENDED AUGUST 31
PARTICULARS	REVENUE & SPENDING VARIANCE	REMARK	ACTIVITY VARIANCE	REMARK
	$		$
Revenue	1500	Favorable	600	Favorable
Less:-Expenses
Cleaning expenses	-440	Unfavorable	-60	Unfavorable
Electricity	40	Favorable	-10	Unfavorable
Maintenance	-225	Unfavorable	-15	Unfavorable
Wages & salaries	-330	Unfavorable	-30	Unfavorable
Depreciation	0	None	0	None
Rent	-200	Unfavorable	0	None
Administrative expenses	103	Favorable	-3	Unfavorable
Total Expenses	-1052	Unfavorable	-118	Unfavorable
Income from opreations	448	Favorable	482	Favorable

Explanation-

Lavage Rapide
Activity Variances
For the month ended August 31
Particulars	Planning Budget	Flexible Budget	Variances	Remark
		$	$
Revenue	8200 car washed*$6.00 per car washed= $49200	49800	600	Favorable
Less:-Expenses
Cleaning expenses	8200 car washed*$0.60 per car washed= $4920	4980	-60	Unfavorable
Electricity	(8200 car washed*$0.10 per car washed)+$1100= $1920	1930	-10	Unfavorable
Maintenance	8200 car washed*$0.15 per car washed= $1230	1245	-15	Unfavorable
Wages & salaries	(8200 car washed*$0.30 per car washed)+$4900= $7360	7390	-30	Unfavorable
Depreciation	8100	8100	0	None
Rent	2200	2200	0	None
Administrative expenses	(8200 car washed*$0.03 per car washed)+$1800 =2046	2049	-3	Unfavorable
Total expenses	27776	27894	-118	Unfavorable
Income from opreations	21424	21906	482	Favorable
Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8300 car washed*$6.00 per car washed	49800	51300	1500	Favorable
Less:-Expenses
Cleaning expenses	8300 car washed*$0.60 per car washed	4980	5420	-440	Unfavorable
Electricity	(8300 car washed*$0.10 per car washed)+$1100	1930	1890	40	Favorable
Maintenance	8300 car washed*$0.15 per car washed	1245	1470	-225	Unfavorable
Wages & salaries	(8300 car washed*$0.30 per car washed)+$4900	7390	7720	-330	Unfavorable
Depreciation		8100	8100	0	None
Rent		2200	2400	-200	Unfavorable
Administrative expenses	(8300 car washed*$0.03 per car washed)+$1800	2049	1946	103	Favorable
Total expenses		27894	28946	-1052	Unfavorable
Income from operations		21906	22354	448	Favorable