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			Cost per Car Washed
Cleaning supplies				$	0.60
Electricity	$	1,100		$	0.05
Maintenance				$	0.30
Wages and salaries	$	4,900		$	0.20
Depreciation	$	8,100
Rent	$	1,900
Administrative expenses	$	1,600		$	0.03

For example, electricity costs are $1,100 per month plus $0.05 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.50 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
Revenue	$	54,750
Expenses:
Cleaning supplies		5,360
Electricity		1,475
Maintenance		2,670
Wages and salaries		6,880
Depreciation		8,100
Rent		2,100
Administrative expenses		1,743
Total expense		28,328
Net operating income	$	26,422

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. Do not round intermediate calculations.)

	Lavage Rapide Revenue and Spending Variances For the Month Ended August 31 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income

Answer 1