50.1K

Verified Solution

Link Copied!

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 companys costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.70
Electricity	$	1,400		$	0.06
Maintenance				$	0.30
Wages and salaries	$	4,500		$	0.40
Depreciation	$	8,300
Rent	$	2,000
Administrative expenses	$	1,500		$	0.02

For example, electricity costs are $1,400 per month plus $0.06 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.60 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		8,200
Revenue	$	55,560
Expenses:
Cleaning supplies		6,170
Electricity		1,856
Maintenance		2,670
Wages and salaries		8,100
Depreciation		8,300
Rent		2,200
Administrative expenses		1,562
Total expense		30,858
Net operating income	$	24,702

Required:

Calculate the company's revenue and spending 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 companys costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.70
Electricity	$	1,400		$	0.06
Maintenance				$	0.30
Wages and salaries	$	4,500		$	0.40
Depreciation	$	8,300
Rent	$	2,000
Administrative expenses	$	1,500		$	0.02

For example, electricity costs are $1,400 per month plus $0.06 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.60 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		8,200
Revenue	$	55,560
Expenses:
Cleaning supplies		6,170
Electricity		1,856
Maintenance		2,670
Wages and salaries		8,100
Depreciation		8,300
Rent		2,200
Administrative expenses		1,562
Total expense		30,858
Net operating income	$	24,702

Required:

Calculate the company's revenue and spending 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 & Explanation Solved by verified expert

See Answer