Question

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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 $1,200 Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Cost per Car Washed $0.60 $ 0.08 $0.20 $ 0.20 $4,200 $8,200 $1,900 $1,400 $ 0.02 For example, electricity costs are $1,200 per month plus $0.08 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.70 per car washed. The actual operating results for August appear below. Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,100 $ 55,700 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income 5,300 1,810 1,840 6,160 8,200 2,100 1,460 26,870 $ 28,830 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.) 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

Solution 1:

OG WN Lavage Rapide Revenue and spending Variances For the month ended August 31 Particulars Actual results Flexible Budget Revenue and spending variances 00 Car Washed 8100 8100 $55,700.000 $54,270.00 $1,430.00 F 10 11 12 13 14 Revenue Expenses: Cleaning Supplies Electricity Maintenance Wages and Salaries Depreciation Rent Administrative expenses Total Expenses 15 $5,300.00 $1,810.00 $1,840.00 $6,160.00 $8,200.00 $2,100.00 $1,460.00 $26,870.00 $4,860.00 $1,848.00 $1,620.00 $5,820.00 $8,200.00 $1,900.00 $1,562.00 $25,810.00 $440.000 $38.00 F $220.00u $340.000 $0.00 None $200.000 $102.00 F $1,060.00 U 16 17 18 19 20 Net Operating Income $28,830.00 $28,460.00] $370.00 F 46 +383 (4) Sheet738 ) Sheet750 Sheet754 Sheet786 (2)

Solution 2:

Jake's Roof Repair Activity Variances For the month ended May 31 Flexible Budget Planning Budget 2900 3000 $153,700.00 $159,000.00 Variances Fav. / Unfav. Particulars Repair Hours $5,300.000 10 12 13 14 Expenses: Wages and Salaries Parts and supplies Equipment Depreciation Truck operating expenses Rent Administrative Expenses Total Expenses $64,300.00 $22,330.00 $3,745.00 $10,660.00 $4,630.00 $5,340.00 $111,005.00 $65,800.00 $23,100.00 $3,780.00 $10,830.00 $4,630.00 $5,390.00 $113,530.00 $1,500.00 F $770.00 F $35.00 F $170.00 F $0.00 None $50.00 F $2,525.00 F 16 17 18 Net Operating Income $42,695.00 $45,470.00 $2,775.00 U 19 20 21 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 44 45 46 47 48 49 50 51 Sheet538 Sheet539 Sheet540 Sheet541 Sheet