Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 Month Cost per Car Washed
Cleaning supplies $ 0.80
Electricity $ 1,400 $ 0.10
Maintenance $ 0.30
Wages and salaries $ 4,800 $ 0.20
Depreciation $ 8,400
Rent $ 2,000
Administrative expenses $ 1,400 $ 0.02

For example, electricity costs should be $1,400 per month plus $0.10 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.00 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 8,300
Revenue $ 51,300
Expenses:
Cleaning supplies 7,060
Electricity 2,190
Maintenance 2,700
Wages and salaries 6,800
Depreciation 8,400
Rent 2,200
Administrative expenses 1,464
Total expense 30,814
Net operating income $ 20,486

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.)

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 Month Cost per Car Washed
Cleaning supplies $ 0.80
Electricity $ 1,400 $ 0.10
Maintenance $ 0.30
Wages and salaries $ 4,800 $ 0.20
Depreciation $ 8,400
Rent $ 2,000
Administrative expenses $ 1,400 $ 0.02

For example, electricity costs should be $1,400 per month plus $0.10 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.00 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 8,300
Revenue $ 51,300
Expenses:
Cleaning supplies 7,060
Electricity 2,190
Maintenance 2,700
Wages and salaries 6,800
Depreciation 8,400
Rent 2,200
Administrative expenses 1,464
Total expense 30,814
Net operating income $ 20,486

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Trap Doors And Trojan Horses An Auditing Action Adventure

Authors: D. Larry Crumbley, David Kerr, Veronica Paz, Lawrence Smith

1st Edition

1531021573, 978-1531021573

More Books

Students also viewed these Accounting questions