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 Costper Month Cost perCar Washed Cleaning supplies $ 0.50 Electricity $ 1,000 $ 0.06 Maintenance $ 0.30 Wages and salaries $ 4,900 $ 0.40 Depreciation $ 8,400 Rent $ 1,900 Administrative expenses $ 1,700 $ 0.03 For example, electricity costs are $1,000 per month plus $0.06 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.80 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,400 Revenue $ 58,540 Expenses: Cleaning supplies 4,650 Electricity 1,468 Maintenance 2,730 Wages and salaries 8,580 Depreciation 8,400 Rent 2,100 Administrative expenses 1,849 Total expense 29,777 Net operating income $ 28,763 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.)
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 Costper Month Cost perCar Washed Cleaning supplies $ 0.50 Electricity $ 1,000 $ 0.06 Maintenance $ 0.30 Wages and salaries $ 4,900 $ 0.40 Depreciation $ 8,400 Rent $ 1,900 Administrative expenses $ 1,700 $ 0.03 For example, electricity costs are $1,000 per month plus $0.06 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.80 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,400 Revenue $ 58,540 Expenses: Cleaning supplies 4,650 Electricity 1,468 Maintenance 2,730 Wages and salaries 8,580 Depreciation 8,400 Rent 2,100 Administrative expenses 1,849 Total expense 29,777 Net operating income $ 28,763 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.)
Chapter2: Building Blocks Of Managerial Accounting
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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 | $ | 0.50 | ||||
| Electricity | $ | 1,000 | $ | 0.06 | ||
| Maintenance | $ | 0.30 | ||||
| Wages and salaries | $ | 4,900 | $ | 0.40 | ||
| Depreciation | $ | 8,400 | ||||
| Rent | $ | 1,900 | ||||
| Administrative expenses | $ | 1,700 | $ | 0.03 | ||
For example, electricity costs are $1,000 per month plus $0.06 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.80 per car washed.
The actual operating results for August appear below.
| Lavage Rapide | ||
| Income Statement | ||
| For the Month Ended August 31 | ||
| Actual cars washed | 8,400 | |
| Revenue | $ | 58,540 |
| Expenses: | ||
| Cleaning supplies | 4,650 | |
| Electricity | 1,468 | |
| Maintenance | 2,730 | |
| Wages and salaries | 8,580 | |
| Depreciation | 8,400 | |
| Rent | 2,100 | |
| Administrative expenses | 1,849 | |
| Total expense | 29,777 | |
| Net operating income | $ | 28,763 |
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.)
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