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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 companys costs:
Fixed Cost per Month | Cost per Car Washed | |
---|---|---|
Cleaning supplies | $ 0.80 | |
Electricity | $ 1,200 | $ 0.15 |
Maintenance | $ 0.20 | |
Wages and salaries | $ 5,000 | $ 0.30 |
Depreciation | $ 6,000 | |
Rent | $ 8,000 | |
Administrative expenses | $ 4,000 | $ 0.10 |
For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 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 | 8,800 |
---|---|
Revenue | $ 43,080 |
Expenses: | |
Cleaning supplies | 7,560 |
Electricity | 2,670 |
Maintenance | 2,260 |
Wages and salaries | 8,500 |
Depreciation | 6,000 |
Rent | 8,000 |
Administrative expenses | 4,950 |
Total expense | 39,940 |
Net operating income | $ 3,140 |
Required: Calculate the company's revenue and spending variances for August.
Lavage Rapide Revenue and Spending Variances For the Month Ended August 31Step by Step Solution
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