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Exercise 9-12 Activity Variances [LO9-2] Lavage Rapide is a Canadian company that owns and operates a large...

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Accounting

Exercise 9-12 Activity Variances [LO9-2]

Lavage Rapide is a Canadian company that owns and operates alarge automatic car wash facility near Montreal. The followingtable 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 $0.10per car washed. The company expects to wash 8,200 cars in Augustand to collect an average of $6.90 per car washed. The companyactually washed 8,300 cars in August.

Required:

Calculate the company's activity variances for August.(Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Input all amounts as positive values.)

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Answer-

Lavage Rapide
Activity Variance
For the month ended August 31
Particulars Planning Budget Flexible Budget Variances Remark
$ $ $
Revenue 8200 car washed*$6.90 per car washed= 56580 8300 car washed*$6.90 per car washed= 57270 690 Favorable
Less:-Expenses
Cleaning expenses 8200 car washed*$0.70 per car washed= 5740 8300 car washed*$0.70 per car washed= 5810 -70 Unfavorable
Electricity (8200 car washed*$0.10 per car washed)+$1000= 1820 (8300 car washed*$0.10 per car washed)+$1000= 1830 -10 Unfavorable
Maintenance 8200 car washed*$0.15 per car washed= 1230 8300 car washed*$0.15 per car washed= 1245 -15 Unfavorable
Wages & salaries (8200 car washed*$0.20 per car washed)+$4100= 5740 (8300 car washed*$0.20 per car washed)+$4100= 5760 -20 Unfavorable
Depreciation 8100 8100 0 None
Rent 1800 1800 0 None
Administrative expenses (8200 car washed*$0.02 per car washed)+$1500= 1664 (8300 car washed*$0.02 per car washed)+$1500= 1666 -2 Unfavorable
Total Expenses 26094 26211 -117 Unfavorable
Income from opreations 30486 31059 573 Favorable

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