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 $1,300 cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.80 $0.10 $0.25 $0.30 $4,100 $ 8,300 $2,000 $1,500 $ 0.03 For example, electricity costs are $1,300 per month plus $0.10 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.60 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,400 $ 56,880 Revenue Expenses: cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 7,140 2,100 2,315 6,950 8,300 2,200 1,649 30,654 $ 26,226 Required: Prepare a flexible budget performance report that shows the company's revenue and spending variances and 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.)

Answer 1

Answer-

LAVAGE RAPIDE
FLEXIBLE BUDGET PERFORMANCE REPORT
FOR THE MONTH ENDED AUGUST 31
PARTICULARS	REVENUE & SPENDING VARIANCE	REMARK	ACTIVITY VARIANCE	REMARK
	$		$
Revenue	1440	Favorable	660	Favorable
Less:-Expenses
Cleaning expenses	-420	Unfavorable	-80	Unfavorable
Electricity	40	Favorable	-10	Unfavorable
Maintenance	-215	Unfavorable	-25	Unfavorable
Wages & salaries	-330	Unfavorable	-30	Unfavorable
Depreciation	0	None	0	None
Rent	-200	Unfavorable	0	None
Administrative expenses	103	Favorable	-3	Unfavorable
Total Expenses	-1022	Unfavorable	-148	Unfavorable
Income from operations	418	Favorable	512	Favorable

Explanation-

Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8400 car washed*$6.60 per car washed	55440	56880	1440	Favorable
Less:-Expenses
Cleaning expenses	8400 car washed*$0.80 per car washed	6720	7140	-420	Unfavorable
Electricity	(8400 car washed*$0.10 per car washed)+$1300	2140	2100	40	Favorable
Maintenance	8400 car washed*$0.25 per car washed	2100	2315	-215	Unfavorable
Wages & salaries	(8400 car washed*$0.30 per car washed)+$4100	6620	6950	-330	Unfavorable
Depreciation		8300	8300	0	None
Rent		2000	2200	-200	Unfavorable
Administrative expenses	(8400 car washed*$0.03 per car washed)+$1500	1752	1649	103	Favorable
Total expenses		29632	30654	-1022	Unfavorable
Income from operations		25808	26226	418	Favorable

Lavage Rapide
Activity Variance
For the month ended August 31
Particulars	Planning Budget	Flexible Budget	Variances	Remark
	$	$	$
Revenue	8300 car washed*$6.60 per car washed= 54780	55440	660	Favorable
Less:-Expenses
Cleaning expenses	8300 car washed*$0.80 per car washed= 6640	6720	-80	Unfavorable
Electricity	(8300 car washed*$0.10 per car washed)+$1300 =2130	2140	-10	Unfavorable
Maintenance	8300 car washed*$0.25 per car washed= 2075	2100	-25	Unfavorable
Wages & salaries	(8300 car washed*$0.30 per car washed)+$4100 =6590	6620	-30	Unfavorable
Depreciation	8300	8300	0	None
Rent	2000	2000	0	None
Administrative expenses	(8300 car washed*$0.03 per car washed)+$1500 =1749	1752	-3	Unfavorable
Total Expenses	29484	29632	-148	Unfavorable
Income from operations	25296	25808	512	Favorable