Question

Exercise 9-14 Prepare a Flexible Budget Performance Report (L09-4] 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: cleaning supplies Electricity Maintenance Nages and salaries Depreciation Rent Administrative expenses Fixed cost Cost per per Month Car Washed $0.70 $1,200 $0.05 $0.15 $4,500 $0.40 $8,300 $2,100 $1,800 $0.04 For example, electricity costs are $1.200 per month plus $0.05 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.10 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 $52,730 Expenses cleaning supplies 6,310 Electricity 1,585 Maintenance 1,485 Wages and salaries 8,180 Depreciation 8,300 Rent 2,300 Administrative 2,032 expenses Total expense 30,192 Net operating income $22,538 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 effectie., zero variance). Input all amounts as positive values.) Lavage Rapide Flexible Budget Performance Report For the Month Ended August 31 Actual Flexible Results Budget 8.400 Planning Budget Cars washed $ 52.7301 Revenue Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 6,310 1.585) 1,485 8.180 8.300 23001 2.032 30.192 $ 22.538

Answer 1

Solution:

Lavage Rapide
Flexible Budget Performance Report
For the month ended August 31
Particulars	Actual results	Revenue and spending variances		Flexible Budget	Activity Variances		Planning Budget
Car Washed	8400			8400			8300
Revenue	$52,730.00	$1,490.00	F	$51,240.00	$610.00	F	$50,630.00
Expenses:
Cleaning Supplies	$6,310.00	$430.00	U	$5,880.00	$70.00	U	$5,810.00
Electricity	$1,585.00	$35.00	F	$1,620.00	$5.00	U	$1,615.00
Maintenance	$1,485.00	$225.00	U	$1,260.00	$15.00	U	$1,245.00
Wages and Salaries	$8,180.00	$320.00	U	$7,860.00	$40.00	U	$7,820.00
Depreciation	$8,300.00	$0.00	None	$8,300.00	$0.00	None	$8,300.00
Rent	$2,300.00	$200.00	U	$2,100.00	$0.00	None	$2,100.00
Administrative expenses	$2,032.00	$104.00	F	$2,136.00	$4.00	U	$2,132.00
Total Expenses	$30,192.00	$1,036.00	U	$29,156.00	$134.00	U	$29,022.00
Net Operating Income	$22,538.00	$454.00	F	$22,084.00	$476.00	F	$21,608.00