Comprehensive Problem (30 pts)

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

	Fixed Cost per Month	Cost per Car Washed
Cleaning supplies		$0.80
Electricity	$1,200	$0.15
Maintenance		$0.20
Wages and salaries	$5,000	$0.30
Depreciation	$6,000
Rent	$8,000
Administrative expenses	$4,000	$0.10

For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 per car washed.

Required:

1. Prepare the companys planning budget for August: (6 pts)

2. Prepare the companys flexible budget for August, assuming the company actually washed 8,800 cars: (6 pts)

3. Prepare a report showing the companys activity variances for August using the actual operating results for August shown below: (6 pts)

Lavage Rapide Income Statement For the Month Ended August 31
Actual cars washed	8,800
Revenue	$43,080
Expenses:
Cleaning supplies	7,560
Electricity	2,670
Maintenance	2,260
Wages and salaries	8,500
Depreciation	6,000
Rent	8,000
Administrative expenses	4,950
Total expenses	39,940
Net operating income	3,140

4. Prepare a report showing the companys revenue and spending variances for August: (6 pts)

5. Prepare a flexible budget performance report that shows the companys revenue and spending variances and the activity variances for August: (6 pts)