Question

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	$	1,100		$	0.07
Maintenance				$	0.15
Wages and salaries	$	4,800		$	0.30
Depreciation	$	8,400
Rent	$	2,000
Administrative expenses	$	1,600		$	0.04

For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.10 per car washed.

The actual operating results for August appear below.

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,600
Revenue	$	53,950
Expenses:
Cleaning supplies		4,750
Electricity		1,665
Maintenance		1,515
Wages and salaries		7,710
Depreciation		8,400
Rent		2,200
Administrative expenses		1,840
Total expense		28,080
Net operating income	$	25,870

figure 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 Revenue and Spending Variances For the Month Ended August 31 Revenue    Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income

Answer 1

Answer-

Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8600 car washed*$6.10 per car washed	52460	53950	1490	Favorable
Less:-Expenses
Cleaning expenses	8600 car washed*$0.50 per car washed	4300	4750	-450	Unfavorable
Electricity	(8600 car washed*$0.07 per car washed)+$1100	1702	1665	37	Favorable
Maintenance	8600 car washed*$0.15 per car washed	1290	1515	-225	Unfavorable
Wages & salaries	(8600 car washed*$0.30 per car washed)+$4800	7380	7710	-330	Unfavorable
Depreciation		8400	8400	0	None
Rent		2000	2200	-200	None
Administrative expenses	(8600 car washed*$0.04 per car washed)+$1600	1944	1840	104	Favorable
Total expenses		27016	28080	-1064	Unfavorable
Income from operations		25444	25870	426	Favorable