5points

Time Remaining 1 hour 7 minutes 33 seconds

01:07:33

Item 4

Time Remaining 1 hour 7 minutes 33 seconds

01:07:33

Exercise 9-12 (Algo) 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 estimates concerning the companys costs:

	Fixed Cost per Month	Cost per Car Washed
Cleaning supplies		$ 0.70
Electricity	$ 1,400	$ 0.07
Maintenance		$ 0.30
Wages and salaries	$ 4,800	$ 0.30
Depreciation	$ 8,100
Rent	$ 1,900
Administrative expenses	$ 1,500	$ 0.01

For example, electricity costs should be $1,400 per month plus $0.07 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.90 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	8,400
Revenue	$ 59,370
Expenses:
Cleaning supplies	6,310
Electricity	1,951
Maintenance	2,730
Wages and salaries	7,650
Depreciation	8,100
Rent	2,100
Administrative expenses	1,483
Total expense	30,324
Net operating income	$ 29,046

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.)

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