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	$	1,400		$	0.08
Maintenance				$	0.15
Wages and salaries	$	4,700		$	0.30
Depreciation	$	8,300
Rent	$	2,100
Administrative expenses	$	1,800		$	0.04

For example, electricity costs are $1,400 per month plus $0.08 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $5.90 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
Revenue	$	51,070
Expenses:
Cleaning supplies		5,480
Electricity		2,034
Maintenance		1,485
Wages and salaries		7,550
Depreciation		8,300
Rent		2,300
Administrative expenses		2,032
Total expense		29,181
Net operating income	$	21,889

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