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 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.70 $0.09 $0.20 $0.40 $1,200 $4,600 $ 8,400 $2,000 $1,400 $0.01 For example, electricity costs are $1,200 per month plus $0.09 per car washed. The company expects to wash 8100 cars in August and to collect an average of $6.70 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 S56.370 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 6,170 1,899 1,860 8,200 8,400 2,200 1,381 30.110 Total expense Net operating income $26,260 Required: Calculate 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.)

Answer 1

Revenue and spending variance

Revenue (8200*6.7-56370)	1430 F
Expenses
Cleaning supplies (8200*.70-6170)	430 U
Electricity (8200*.090+1200-1899)	39 F
maintenance (8200*.20-1860)	220 U
Wages and salaries (8200*.40+4600-8200)	320 U
Depreciation	0 None
Rent	200 U
Administrative expense	101 F
Total expense	1030 U
Net operating income	400 F