Question
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the companys costs:
Fixed Cost per MonthCost per Car WashedCleaning supplies $ 0.70Electricity$ 1,400$ 0.06Maintenance $ 0.20Wages and salaries$ 5,000$ 0.20Depreciation$ 8,100 Rent$ 1,900 Administrative expenses$ 1,800$ 0.05For example, electricity costs should be $1,400 per month plus $0.06 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.60 per car washed. The actual operating results for August are as follows: Lavage Rapide Income
Income StatementFor the Month Ended August 31Actual cars washed8,300Revenue$ 56,220Expenses: Cleaning supplies6,240Electricity1,862Maintenance1,880Wages and salaries7,000Depreciation8,100Rent2,100Administrative expenses2,110Total expense29,292Net operating income$ 26,928
Required:
Prepare a flexible budget performance report that shows the companys revenue and spending variances and activity 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.)
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