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

	Actual	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Cars washed	8200			8200			8100
Revenue	50700	1500	F	49200	600	F	48600
Expenses:
Cleaning supplies	3740	460	U	3280	40	U	3240
Electricity	1637	37	F	1674	7	U	1667
Maintenance	2265	215	U	2050	25	U	2025
Wages and salaries	6080	340	U	5740	20	U	5720
Depreciation	8400	0	None	8400	0	None	8400
Rent	2300	200	U	2100	0	None	2100
Administrative expenses	2024	104	F	2128	4	U	2124
Total expenses	26446	1074	U	25372	96	U	25276
Net operating income	24254	426	F	23828	504	F	23324