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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
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 | $ | 1,000 | $ | 0.09 | |
Maintenance | $ | 0.20 | |||
Wages and salaries | $ | 4,700 | $ | 0.20 | |
Depreciation | $ | 8,300 | |||
Rent | $ | 2,100 | |||
Administrative expenses | $ | 1,300 | $ | 0.04 | |
|
For example, electricity costs are $1,000 per month plus $0.09 per car washed. The company expected to wash 8,300 cars in August and to collect an average of $6.60 per car washed. The company actually washed 8,400 cars.
The actual operating results for August appear below.
Lavage Rapide Income Statement For the Month Ended August 31 | ||
Actual cars washed | 8,400 | |
Revenue | $ | 56,880 |
Expenses: | ||
Cleaning supplies | 4,650 | |
Electricity | 1,717 | |
Maintenance | 1,900 | |
Wages and salaries | 6,720 | |
Depreciation | 8,300 | |
Rent | 2,300 | |
Administrative expenses | 1,532 | |
Total expense | 27,119 | |
Net operating income | $ | 29,761 |
|
Required:
Compute the company's activity variances for August.
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