Question

Exercise 9-13 Revenue and Spending Variances (LO9-3) 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 $0.50 $0.07 $0.30 $0.30 $1,200 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $5,000 $8,100 $2,100 $1,400 $0.03 For example, electricity costs are $1,200 per month plus $0.07 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 actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,200

correct answers only please

Answer 1

Lavage Rapide
Revenue and Spending Variances
For the Month Ended August 31
Revenue	$1,490	F
Expenses:
Cleaning supplies	$450	U
Electricity	$37	F
Maintenance	$210	U
Wages and salaries	$330	U
Depreciation	$0	None
Rent	$200	U
Administrative expenses	$103	F
Total expenses	$1,050	U
Net operating income	$440	F

Calculations:

i. Flexible budget:

	Variable costs		Fixed costs	Total
	Per car washed	Per month	Per month
Cars washed				8,200
Revenue A	$6.10	$50,020		$50,020
Expenses:
Cleaning supplies	$0.50	$4,100		$4,100
Electricity	$0.07	$574	$1,200	$1,774
Maintenance	$0.30	$2,460		$2,460
Wages and salaries	$0.30	$2,460	$5,000	$7,460
Depreciation			$8,100	$8,100
Rent			$2,100	$2,100
Administrative expenses	$0.03	$246	$1,400	$1,646
Total expenses B				$27,640
Net operating income A-B				$22,380

Revenue and Spending Variance:

	Actual	Spending Variance		Flexible
Revenue A	$51,510	$1,490	F	$50,020
Expenses:
Cleaning supplies	$4,550	$450	U	$4,100
Electricity	$1,737	$37	F	$1,774
Maintenance	$2,670	$210	U	$2,460
Wages and salaries	$7,790	$330	U	$7,460
Depreciation	$8,100	$0	None	$8,100
Rent	$2,300	$200	U	$2,100
Administrative expenses	$1,543	$103	F	$1,646
Total expenses B	$28,690	$1,050	U	$27,640
Net operating income A-B	$22,820	$440	F	$22,380

For revenue and net Operating income, If actual is more then favorable otherwise unfavorable

For expenses, If flexible is more then favorable otherwise unfavorable