Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the companys

Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the companys expected costs:

Fixed Cost per Month Cost per Car Washed
Cleaning supplies $ 0.80
Electricity $ 2,150 0.20
Maintenance 0.40
Wages and salaries 5,400 0.50
Depreciation 9,000
Rent 2,800
Administrative expenses 2,520 0.05

For example, electricity costs are $2,150 per month plus $0.20 per car washed. The company expects to wash 8,700 cars in October and to collect an average of $6.60 per car washed.

Auto Lavages actual level of activity was 8,800 cars. The actual revenues and expenses for October are given below:

Auto Lavage Income Statement For the Month Ended October 31
Actual cars washed 8,800
Sales $ 60,300
Variable expenses:
Cleaning supplies 7,640
Electricity 1,820
Maintenance 2,990
Wages and salaries 4,760
Administrative 520
Fixed expenses:
Electricity 2,220
Wages and salaries 5,400
Depreciation 9,000
Rent 2,800
Administrative 2,445
Total expense 39,595
Net operating income $ 20,705

Required: 1. Prepare a flexible budget performance report for October. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

2. Prepare a comprehensive performance report for October. Assume that the static budget for October was based on an activity level of 8,700 cars. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advances In Quantitative Analysis Of Finance And Accounting - New Series

Authors: Lee Cheng Few

2nd Edition

9812386696, 9789812386694

More Books

Students also viewed these Accounting questions