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		$	0.05
Maintenance				$	0.20
Wages and salaries	$	4,000		$	0.30
Depreciation	$	8,300
Rent	$	1,900
Administrative expenses	$	1,400		$	0.05

For example, electricity costs are $1,400 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 are as follows:

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,200
Revenue	$	54,750
Expenses:
Cleaning supplies		5,360
Electricity		1,775
Maintenance		1,860
Wages and salaries		6,790
Depreciation		8,300
Rent		2,100
Administrative expenses		1,705
Total expense		27,890
Net operating income	$	26,860

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.)

Answer 1

Solution:

Lavage Rapide
Revenue and spending Variances
For the month ended August 31
Particulars	Actual results	Flexible Budget	Revenue and spending variances
Car Washed	8200	8200
Revenue	$54,750.00	$53,300.00	$1,450.00	F
Expenses:
Cleaning Supplies	$5,360.00	$4,920.00	$440.00	U
Electricity	$1,775.00	$1,810.00	$35.00	F
Maintenance	$1,860.00	$1,640.00	$220.00	U
Wages and Salaries	$6,790.00	$6,460.00	$330.00	U
Depreciation	$8,300.00	$8,300.00	$0.00	None
Rent	$2,100.00	$1,900.00	$200.00	U
Administrative expenses	$1,705.00	$1,810.00	$105.00	F
Total Expenses	$27,890.00	$26,840.00	$1,050.00	U
Net Operating Income	$26,860.00	$26,460.00	$400.00	F

2. General - - Home Insert Page Layout Excel Poo-1.1 - Microsoft Excel - 7 X File Formulas Dala Review View Calculate Now Insert AutoSum Recently Financial Logical Text Date & Lookup & Math & More Function Used - - Time - Reference Trig Functions Function Library C6 - For the month ended August 31 AB Define Name Use in Formula- Name Manager Create from Selection Defined Names Trace Precedents Show Formulas Trace Dependents Error Checking Watch Remove Arrows Evaluate Formula Window Formula Auditing Calculation calculate Sheet Options Calculation Lavage Rapide Revenue and spending Variances For the month ended August 31 Particulars Actual results Flexible Budget Revenue and spending variances Car Washed 8200 8200 =t8*6.5 =ABS(D10-E10) U Revenue 54750 Expenses: Cleaning Supplies 5360 Electricity 1775 Maintenance 1860 Wares and Salaries 6790 Depreciation 8300 Rent 2100 Administrative expenses 1705 Total Expenses =SUM(D12:018) -E8*0.6 =1400+(E8*0.05) -[80.2 -4000+E8*0.3) 8300 1900 -1400+(E8*0.05) =SUM(E12:E18) -ABS(D12-E12) =ABS(D13-E13) -ABS(D14 514) -ABS(D15-E15) =ABS(D16-E16) -ABS(D17 E17) -ABS(D18-E18) =ABS(D19-E19) None F Net Operating Income =D10-D19 =E10-E19 =ABS(D21-E21) F ► Sheet742 Ready Circular References Sheet747 Sheet748 Sheet383 (4) Sheet738 Sheet750 Sheet754 Sheet786 (2) Sheet7561 Type here to search o les OR A 4 08-54 ENG 30-11-2019 1