Exercise 8-9 Prepare a Report Showing Revenue and Spending Variances [LO8-2]

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				$	0.50
Electricity	$	1,200		$	0.06
Maintenance				$	0.10
Wages and salaries	$	4,400		$	0.30
Depreciation	$	8,300
Rent	$	2,200
Administrative expenses	$	1,700		$	0.02

For example, electricity costs are $1,200 per month plus $0.06 per car washed. The company actually washed 7,900 cars in August. The company expected to collect an average of $6.30 per car washed.

The actual operating results for August appear below.

Lavage Rapide Income Statement For the Month Ended August 31
Actual cars washed		7,900
Revenue	$	49,735
Expenses:
Cleaning supplies		4,380
Electricity		1,804
Maintenance		1,320
Wages and salaries		7,590
Depreciation		8,300
Rent		2,200
Administrative expenses		1,918
Total expense		27,512
Net operating income	$	22,223

Required:

Prepare a report showing the companys 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		U
Expenses:
Cleaning supplies		U
Electricity		U
Maintenance		U
Wages and salaries		U
Depreciation		None
Rent		None
Administrative expenses		U
Total expense		U
Net operating income		U