Question

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Exercise 9-13 Revenue and Spending Variances (LO9-3] 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 Wages and salaries Depreciation Rent Administrative expenses Fixed Cost Cost per per Month Car Washed $0.40 $1,400 $0.09 $0.20 $4,500 $0.40 $8,200 $2,000 $1,400 $0.02 For example, electricity costs are $1,400 per month plus $0.09 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 are as follows: Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,200 Revenue $50, 700 Expenses: cleaning supplies 3,740 Electricity 2,099 Maintenance 1,860 Wages and salaries 8,100 Depreciation 8,200 Rent 2,200 Administrative 1,462 expenses Total expense 27,661 Net operating income $23,039 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

		Revenue and Spending variance
		Actual	Flexible	Revenue & spending
		Result	budget	variance
cars washed		8,200	8200
Revenue		50,700	49200	1,500	F
Expenses
Cleaning supplies		3,740	3280	460	U
Electricity		2,099	2138	39	F
Maintenance		1,860	1640	220	U
Wages and salaries		8,100	7780	320	U
Depreciation		8,200	8,200	0	N
Rent		2,200	2,000	200	U
Administrative expenses		1,462	1,564	102	F
total expense		27,661	26,602	1,059	U
net operating income		23,039	22,598	441	F