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.
In: Accounting
Exercise 9-12 Activity Variances [LO9-2]
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 | $ | 0.70 | |||||
| Electricity | $ | 1,000 | $ | 0.10 | |||
| Maintenance | $ | 0.15 | |||||
| Wages and salaries | $ | 4,100 | $ | 0.20 | |||
| Depreciation | $ | 8,100 | |||||
| Rent | $ | 1,800 | |||||
| Administrative expenses | $ | 1,500 | $ | 0.02 | |||
For example, electricity costs are $1,000 per month plus $0.10 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.90 per car washed. The company actually washed 8,300 cars in August.
Required:
Calculate the company's 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.)
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