Question
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
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 company's costs:
Fixed Cost
per MonthCost per
Car WashedCleaning supplies$0.70Electricity$1,400$0.10Maintenance$0.25Wages and salaries$4,700$0.30Depreciation$8,500Rent$2,100Administrative expenses$1,500$0.03
For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.70 per car washed.
The actual operating results for August are as follows:
Lavage RapideIncome StatementFor the Month Ended August 31Actual cars washed8,400Revenue$57,710Expenses:Cleaning supplies6,310Electricity2,200Maintenance2,315Wages and salaries7,550Depreciation8,500Rent2,300Administrative expenses1,649Total expense30,824Net operating income$26,886
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. Do not round intermediate calculations.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started