Exercise 9-13 (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 data concerning the companys costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.70
Electricity	$	1,100		$	0.07
Maintenance				$	0.20
Wages and salaries	$	4,700		$	0.40
Depreciation	$	8,300
Rent	$	1,800
Administrative expenses	$	1,700		$	0.04

For example, electricity costs are $1,100 per month plus $0.07 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.30 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	$	54,390
Expenses:
Cleaning supplies		6,310
Electricity		1,651
Maintenance		1,900
Wages and salaries		8,380
Depreciation		8,300
Rent		2,000
Administrative expenses		1,932
Total expense		30,473
Net operating income	$	23,917

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.)

Revenue & Spending Variances for the Month Ended August 31	$	U, F, None
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income