Lavage Rapide is a Canadian company that owns and operates a large automatic car wash...
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Accounting
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the companys costs:
Fixed Cost per Month
Cost per Car Washed
Cleaning supplies
$ 0.50
Electricity
$ 1,000
$ 0.06
Maintenance
$ 0.30
Wages and salaries
$ 4,500
$ 0.30
Depreciation
$ 8,500
Rent
$ 2,100
Administrative expenses
$ 1,700
$ 0.02
For example, electricity costs should be $1,000 per month plus $0.06 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.40 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
8,300
Revenue
$ 54,580
Expenses:
Cleaning supplies
4,600
Electricity
1,462
Maintenance
2,700
Wages and salaries
7,320
Depreciation
8,500
Rent
2,300
Administrative expenses
1,764
Total expense
28,646
Net operating income
$ 25,934
Required:
Calculate the company's revenue and spending variances for August.
Note: 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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