Exercise 9-9 Flexible Budget Performance Report [LO3, LO4]

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				$	0.90
Electricity	$	3,550			0.30
Maintenance					0.50
Wages and salaries		6,700			0.60
Depreciation		10,300
Rent		4,100
Administrative expenses		3,850			0.08

For example, electricity costs are $3,550 per month plus $0.30 per car washed. The company expects to wash 10,000 cars in October and to collect an average of $7.90 per car washed.

Auto Lavages actual level of activity was 10,100 cars. The actual revenues and expenses for October are given below:

Auto Lavage Income Statement For the Month Ended October 31
Actual cars washed		10,100
Sales	$	82,000
Variable expenses:
Cleaning supplies		9,950
Electricity		3,099
Maintenance		4,528
Wages and salaries		6,350
Administrative		890
Fixed expenses:
Electricity		3,650
Wages and salaries		6,700
Depreciation		10,300
Rent		4,100
Administrative		3,745
Total expense		53,312
Net operating income	$	28,688

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 10,000 cars. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)