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 $1,100 cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.40 $0.07 $0.25 $0.20 $4,100 $8,400 $2,100 $1,800 $0.04 For example, electricity costs are $1,100 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.

Answer 1

Answer-

LAVAGE RAPIDE
FLEXIBLE BUDGET PERFORMANCE REPORT
FOR THE MONTH ENDED AUGUST 31
PARTICULARS	REVENUE & SPENDING VARIANCE	REMARK	ACTIVITY VARIANCE	REMARK
	$		$
Revenue	1500	Favorable	600	Favorable
Less:-Expenses
Cleaning expenses	-460	Unfavorable	-40	Unfavorable
Electricity	37	Favorable	-7	Unfavorable
Maintenance	-215	Unfavorable	-25	Unfavorable
Wages & salaries	-340	Unfavorable	-20	Unfavorable
Depreciation	0	None	0	None
Rent	-200	Unfavorable	0	None
Administrative expenses	104	Favorable	-4	Unfavorable
Total Expenses	-1074	Unfavorable	-96	Unfavorable
Income from operations	426	Favorable	504	Favorable

Explanation-

Lavage Rapide
Activity Variance
For the month ended August 31
Particulars	Planning Budget	Flexible Budget	Variances	Remark
	$	$	$
Revenue	8100 car washed*$6.00 per car washed= 48600	49200	600	Favorable
Less:-Expenses
Cleaning expenses	8100 car washed*$0.40 per car washed= 3240	3280	-40	Unfavorable
Electricity	(8100 car washed*$0.07 per car washed)+$1100= 1667	1674	-7	Unfavorable
Maintenance	8100 car washed*$0.25 per car washed= 2025	2050	-25	Unfavorable
Wages & salaries	(8100 car washed*$0.20 per car washed)+$4100= 5720	5740	-20	Unfavorable
Depreciation	8400	8400	0	None
Rent	2100	2100	0	None
Administrative expenses	(8100 car washed*$0.04 per car washed)+$1800= 2124	2128	-4	Unfavorable
Total Expenses	25276	25372	-96	Unfavorable
Income from operations	23324	23828	504	Favorable
Lavage Rapide
Revenue & Spending Variances
For the month ended August 31
Particulars		Flexible Budget	Actual Results	Variances	Remark
		$	$	$
Revenue	8200 car washed*$6.00 per car washed	49200	50700	1500	Favorable
Less:-Expenses
Cleaning expenses	8200 car washed*$0.40 per car washed	3280	3740	-460	Unfavorable
Electricity	(8200 car washed*$0.07 per car washed)+$1100	1674	1637	37	Favorable
Maintenance	8200 car washed*$0.25 per car washed	2050	2265	-215	Unfavorable
Wages & salaries	(8200 car washed*$0.20 per car washed)+$4100	5740	6080	-340	Unfavorable
Depreciation		8400	8400	0	None
Rent		2100	2300	-200	Unfavorable
Administrative expenses	(8200 car washed*$0.04 per car washed)+$1800	2128	2024	104	Favorable
Total expenses		25372	26446	-1074	Unfavorable
Income from operations		23828	24254	426	Favorable