80.2K

Verified Solution

Link Copied!

Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the companys expected costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.90
Electricity	$	2,050			0.30
Maintenance					0.50
Wages and salaries		5,300			0.60
Depreciation		8,900
Rent		2,700
Administrative expenses		2,410			0.04
For example, electricity costs are $2,050 per month plus $0.30 per car washed. The company expects to wash 8,600 cars in October and to collect an average of $8.00 per car washed. Auto Lavages actual level of activity was 8,700 cars. The actual revenues and expenses for October are given below: Auto Lavage Income Statement For the Month Ended October 31 Actual cars washed 8,700 Sales $ 71,500 Variable expenses: Cleaning supplies 8,450 Electricity 2,700 Maintenance 3,825 Wages and salaries 5,360 Administrative 446 Fixed expenses: Electricity 2,110 Wages and salaries 5,300 Depreciation 8,900 Rent 2,700 Administrative 2,345 Total expense 42,136 Net operating income $ 29,364 Required: 1. Prepare a flexible budget performance report for October. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) 2. Prepare a comprehensive performance report for October. Assume that the static budget for October was based on an activity level of 8,600 cars. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

Answer & Explanation Solved by verified expert

See Answer