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 $1,200 cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.70 $0.05 $0.15 $0.30 $5,000 $ 8,300 $1,900 $1,400 $0.04 For example, electricity costs are $1,200 per month plus $0.05 per car washed. The company expects to wash 8,400 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 8,500 $ 55,860 Revenue Expenses: cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 6,380 1,590 1,500 7,880 8,300 2,100 1,636 29,386 $ 26,474

Answer 1

Correct Answer:

Lavage Rapide
Flexible budget performance report
for the month ended August 31
	Actual Results	Variance		Flexible Budget	Variance		Planning budget
Cars washed	8500	0	None	8500	100	F	8400
Revenue	$                55,860.00	$           1,460.00	F	$           54,400.00	$                   640.00	F	$         53,760.00
Expenses:		$                        -			$                             -
Cleaning supplies	$                   6,380.00	$               430.00	U	$             5,950.00	$                      70.00	U	$           5,880.00
Electricity	$                   1,590.00	$               (35.00)	F	$             1,625.00	$                        5.00	U	$           1,620.00
Maintenance	$                   1,500.00	$               225.00	U	$             1,275.00	$                      15.00	U	$           1,260.00
Wages and salaries	$                   7,880.00	$               330.00	U	$             7,550.00	$                      30.00	U	$           7,520.00
Depreciation	$                   8,300.00	$                        -	NONE	$             8,300.00	$                             -	NONE	$           8,300.00
Rent	$                   2,100.00	$               200.00	U	$             1,900.00	$                             -	NONE	$           1,900.00
Administrative expenses	$                   1,636.00	$            (104.00)	F	$             1,740.00	$                        4.00	U	$           1,736.00
Total Expenses	$                29,386.00	$           1,046.00	U	$           28,340.00	$                   124.00	U	$         28,216.00
Net operating income	$                26,474.00	$               414.00	F	$           26,060.00	$                   516.00	F	$         25,544.00

End of answer.

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