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				$	0.70
Electricity	$	1,300		$	0.08
Maintenance				$	0.25
Wages and salaries	$	5,000		$	0.30
Depreciation	$	8,100
Rent	$	2,100
Administrative expenses	$	1,300		$	0.05

For example, electricity costs are $1,300 per month plus $0.08 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.10 per car washed. The company actually washed 8,200 cars in August.

Required:

Calculate the company's activity 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 Activity Variances For the Month Ended August 31 Revenue F Expenses: Cleaning supplies 70 U Electricity U Maintenance U Wages and salaries U Depreciation None Rent None Administrative expenses U Total expense U Net operating income F

Answer 1

Calculate the company's activity 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 Activity Variances For the Month Ended August 31 Revenue 610 F Expenses: Cleaning supplies 70 U Electricity 8 U Maintenance 25 U Wages and salaries 30 U Depreciation 0 None Rent 0 None Administrative expenses 5 U Total expense 138 U Net operating income 472 F