Sudz'N'Bubbles Company owns and operates 10 car washes in Ontario. The general manager of each location reports to the company president, Christopher O'Donnell.
At the end of each quarter, Christopher evaluates the performance of each of the car wash locations and his evaluations determine the size of the bonus given to the staff at each location. If a location achieves its profit target, it receives $5,000 that is distributed among the staff who work at that location. The bonus increases by $5 for every $20 the location exceeded its profit target.
It is not uncommon for Christopher to make subjective adjustments to the bonus to take into account factors he deems outside the control of the staff at a location. For example, Christopher has made adjustments for the adverse effects on revenue of road construction in front of one location, downtime caused by vandalism at another location, and weather patterns that are significantly different from expected. In fact, weather is the largest uncontrollable factor that Christopher has to consider. Sales volumes tend to drop sharply when it rains but end up much closer to forecasts on good days when the sun is shining.
The budget for the Ottawa branch of Sudz'N'Bubbles, which is updated quarterly, was pre- pared on assumptions of hours of good weather. The average annual sunshine in Ottawa is 2,084 hours. Based on the wide-ranging variability of the weather, the assumptions are often wrong. During the 2015 spring quarter, it rained many more hours than were assumed in the budget, and actual profits for all the locations were far below the budget.
The financial results of the Ottawa location are shown in Table 1. Table 2 shows some operating assumptions and statistics for the Ottawa location. The budget was based on the assumption that the Ottawa location would be open every day, for 10 hours per day, when it was not raining. The car wash employees were paid a minimum hourly wage plus an amount for each car wash, so labour costs were partially variable with revenues.
Table 1: Variances for Ottawa Sudz'N'Bubbles for Spring 2015

Table 2: Operating Statistics for Ottawa Sudz'N'Bubbles for Spring 2015

Required:
Assume the role of Christopher and write a memo to the manager of the Ottawa location assessing the performance of the location. What bonus should be paid to the people working in the Ottawa Sudz'N'Bubbles? Explain your decision (be sure to include the selling price variance as part of this explanation).

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Budget Actual Variances Revenue Variable expenses (50% of revenue) Fixed expenses Total expenses Profit $155,400 77,700 S149,500 -$5,900 74,750 2,950 55,000 -6,500 129,750 19,750 126,200 -9,450 Budget Assumptions 21 Actual 25 Average number of vehicles washed in a good weather hour Average revenue per vehicle Total working hours in quarter Hours of bad weather in quarter Hours of good weather in quarter s10.00 $11.50 920 180 740 920 400 520