Question
Lavage Rapide owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the companys costs: Fixed Cost per
Lavage Rapide 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 | $ 0.40 | ||
Electricity | $ 1,300 | $ 0.09 | |
Maintenance | $ 0.10 | ||
Wages and salaries | $ 4,500 | $ 0.20 | |
Depreciation | $ 8,400 | ||
Rent | $ 2,100 | ||
Administrative expenses | $ 1,800 | $ 0.03 |
For example, electricity costs should be $1,300 per month plus $0.09 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.40 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 | $ 54,580 |
Expenses: | |
Cleaning supplies | 3,780 |
Electricity | 2,008 |
Maintenance | 1,060 |
Wages and salaries | 6,500 |
Depreciation | 8,400 |
Rent | 2,300 |
Administrative expenses | 1,946 |
Total expenses | 25,994 |
Net operating income | $ 28,586 |
Required:
Calculate the company's revenue and spending variances for August.
Note: 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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