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	$	1,200		$	0.07
Maintenance				$	0.15
Wages and salaries	$	4,700		$	0.30
Depreciation	$	8,000
Rent	$	2,100
Administrative expenses	$	1,800		$	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 $6.00 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
Revenue	$	50,700
Expenses:
Cleaning supplies		4,550
Electricity		1,737
Maintenance		1,455
Wages and salaries		7,490
Depreciation		8,000
Rent		2,300
Administrative expenses		1,943
Total expense		27,475
Net operating income	$	23,225

Required:

Calculate the company's revenue and spending variances for August.

Answer 1

	Actual	Revenue and spending variances		Flexible budget
Cars washed	8200			8200
Revenue	50700	1500	F	49200
Expenses:
Cleaning supplies	4550	450	U	4100
Electricity	1737	37	F	1774
Maintenance	1455	225	U	1230
Wages and salaries	7490	330	U	7160
Depreciation	8000	0	None	8000
Rent	2300	200	U	2100
Administrative expenses	1943	103	F	2046
Total expenses	27475	1065	U	26410
Net operating income	23225	435	F	22790