Auto Lavage is a Canadian company that owns and operates a largeautomatic carwash facility near Quebec. The following tableprovides data concerning the company’s expectedcosts:
| Fixed Cost
per Month | | Cost per
Car Washed |
| Cleaning supplies | | | | $ | 0.90 |
| Electricity | $ | 3,450 | | | 0.30 |
| Maintenance | | | | | 0.50 |
| Wages and salaries | | 6,600 | | | 0.60 |
| Depreciation | | 10,200 | | | |
| Rent | | 4,000 | | | |
| Administrative expenses | | 3,740 | | | 0.07 |
|
For example, electricity costs are $3,450 per month plus $0.30 percar washed. The company expects to wash 9,900 cars in October andto collect an average of $7.80 per car washed.
Auto Lavage’s actual level of activity was 10,000 cars. Theactual revenues and expenses for October are given below:
Auto Lavage
Income Statement
For the Month Ended October 31 |
| Actual cars washed | | 10,000 |
| Sales | $ | 79,900 |
| | |
| Variable expenses: | |
| Cleaning supplies | | 9,850 |
| Electricity | | 3,082 |
| Maintenance | | 4,525 |
| Wages and salaries | | 6,250 |
| Administrative | | 790 |
| Fixed expenses: | | |
| Electricity | | 3,540 |
| Wages and salaries | | 6,600 |
| Depreciation | | 10,200 |
| Rent | | 4,000 |
| Administrative | | 3,645 |
| | |
| Total expense | | 52,482 |
| | |
| Net operating income | $ | 27,418 |
| | |
|
Prepare a flexible budget performance report for October.(Indicate the effect of each variance by selecting "F" forfavourable, "U" for unfavourable, and "None" for no effect (i.e.,zero variance).)
2. Prepare a comprehensive performance reportfor October. Assume that the static budget for October was based onan activity level of 9,900 cars. (Indicate the effect ofeach variance by selecting "F" for favourable, "U" forunfavourable, and "None" for no effect (i.e., zerovariance).)
