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 $ 0.80 Electricity $ 1,100 $ 0.05 Maintenance $ 0.30 Wages and salaries $ 4,800 $ 0.20 Depreciation $ 8,200 Rent $ 1,900 Administrative expenses $ 1,700 $ 0.03 For example, electricity costs are $1,100 per month plus $0.05 per car washed. The company expects to wash 8,400 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 8,500 Revenue $ 56,700 Expenses: Cleaning supplies 7,220 Electricity 1,490 Maintenance 2,760 Wages and salaries 6,840 Depreciation 8,200 Rent 2,100 Administrative expenses 1,852 Total expense 30,462 Net operating income $ 26,238 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 effect (i.e., zero variance). Input all amounts as positive values.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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	Cost per Car Washed
Cleaning supplies			$	0.80
Electricity	$	1,100	$	0.05
Maintenance			$	0.30
Wages and salaries	$	4,800	$	0.20
Depreciation	$	8,200
Rent	$	1,900
Administrative expenses	$	1,700	$	0.03

For example, electricity costs are $1,100 per month plus $0.05 per car washed. The company expects to wash 8,400 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		8,500

Revenue	$	56,700
Expenses:
Cleaning supplies		7,220
Electricity		1,490
Maintenance		2,760
Wages and salaries		6,840
Depreciation		8,200
Rent		2,100
Administrative expenses		1,852
Total expense		30,462
Net operating income	$	26,238

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 effect (i.e., zero variance). Input all amounts as positive values.)

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