Question

Refer to the following data of Lavage Rapide a Swiss company. The Swiss currency is the Swiss franc, which is denoted by SFr.

Lavage Rapide Flexible budget for the month ended 31 august
Overhead costs	Cost formula (per car)		Activity (cars)
			8,000		9,000		10,000
	SFr		SFr		SFr		SFr
Variable overhead costs:
Cleaning supplies	?		?		7,200		?
Electricity	?		?		2,700		?
Maintenance	?		?		1,800		?
Total variable overhead cost	?		?		?		?
Fixed overhead costs:
Operator wages			?		9,000		?
Depreciation			?		6,000		?
Rent			?		8,000		?
Total fixed overhead cost			?		?		?
Total overhead cost			?		?		?
Lavage Rapide’s actual level of activity during August was 8,900 cars, although the owner had constructed his static budget for the month assuming the level of activity would be 8,800 cars. The actual overhead costs incurred during August are given below: Lavage Rapide’s actual level of activity during August was 8,900 cars, although the owner had constructed his static budget for the month assuming the level of activity would be 8,800 cars. The actual overhead costs incurred during August are given below: Actual costs incurred for 8,900 cars SFr Variable overhead costs:      Cleaning supplies 7,080      Electricity 2,460      Maintenance 1,550 Fixed overhead costs:      Operator wages 9,100      Depreciation 7,000      Rent 8,000   Required: Prepare a flexible budget performance report for both the variable and fixed overhead costs for August.

Answer 1

		Cost formula	Activity (cars)
		(per car)	8,000	9,000	10,000
Overhead Costs
Variable overhead costs
Cleaning supplies		0.80	6,400	7,200	8,000
Electricity		0.30	2,400	2,700	3,000
Maintenance		0.20	1,600	1,800	2,000
Total variable overhead cost		1.30	10,400	11,700	13,000
Fixed overhead costs
Operating wages			9,000	9,000	9,000
Depreciation			6,000	6,000	6,000
Rent			8,000	8,000	8,000
Total fixed overhead cost			23,000	23,000	23,000
Total overhead cost			33,400	34,700	36,000

Particulars	Flexible	Actual	Variance
	8,900	8,900
Overhead Costs
Variable overhead costs
Cleaning supplies	7,120	7,080	40	Favorable
Electricity	2,670	2,460	210	Favorable
Maintenance	1,780	1,550	230	Favorable
Total variable overhead cost	11,570	11,090	480	Favorable
Fixed overhead costs
Operating wages	9,000	9,100	100	Unfavorable
Depreciation	6,000	7,000	1,000	Unfavorable
Rent	8,000	8,000	-
Total fixed overhead cost	23,000	24,100	1,100	Unfavorable
Total overhead cost	34,570	35,190	1,580	Unfavorable