FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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am.100.

Lavage Rapide owns and operates a large automatic car wash near Montreal. The following table provides data concerning the
company's costs:
per Month
Fixed Cost
Cost per
Car Washed
Cleaning supplies
$ 0.80
Electricity
$ 1,000
$ 0.07
Maintenance
$ 0.15
Wages and salaries
$ 4,500
$ 0.30
Depreciation
Rent
$ 8,200
$2,100
Administrative expenses
$ 1,800
$ 0.02
For example, electricity costs are $1,000 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August
and to collect an average of $6.60 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
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income
Required:
8,600
$ 58,200
7,300
1,565
1,515
7,410
8,200
2,300
1,870
30,160
$ 28,840
Calculate the company's revenue and spending variances for August.
Note: 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.
Lavage Rapide
Revenue and Spending Variances
For the Month Ended August 31
Revenue
$
8,100 U
Expenses:
Cleaning supplies
150 U
Electricity
40 U
Maintenance
2,175 F
Wages and salaries
4,230 F
Depreciation
0 None
Rent
Administrative expenses
0 None
10 F
Total expense
3,375 U
Net operating income
S 11,875 U
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Transcribed Image Text:Lavage Rapide owns and operates a large automatic car wash near Montreal. The following table provides data concerning the company's costs: per Month Fixed Cost Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,000 $ 0.07 Maintenance $ 0.15 Wages and salaries $ 4,500 $ 0.30 Depreciation Rent $ 8,200 $2,100 Administrative expenses $ 1,800 $ 0.02 For example, electricity costs are $1,000 per month plus $0.07 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.60 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 Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income Required: 8,600 $ 58,200 7,300 1,565 1,515 7,410 8,200 2,300 1,870 30,160 $ 28,840 Calculate the company's revenue and spending variances for August. Note: 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. Lavage Rapide Revenue and Spending Variances For the Month Ended August 31 Revenue $ 8,100 U Expenses: Cleaning supplies 150 U Electricity 40 U Maintenance 2,175 F Wages and salaries 4,230 F Depreciation 0 None Rent Administrative expenses 0 None 10 F Total expense 3,375 U Net operating income S 11,875 U
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