Exercise 9-12 Activity Variances [LO9-2]
Lavage Rapide is a Canadian company that owns and operates alarge automatic car wash facility near Montreal. The followingtable provides data concerning the company’s costs:
| Fixed Cost
per Month | Cost per
Car Washed |
| Cleaning supplies | | | | $ | 0.70 | |
| Electricity | $ | 1,000 | | $ | 0.10 | |
| Maintenance | | | | $ | 0.15 | |
| Wages and salaries | $ | 4,100 | | $ | 0.20 | |
| Depreciation | $ | 8,100 | | | | |
| Rent | $ | 1,800 | | | | |
| Administrative expenses | $ | 1,500 | | $ | 0.02 | |
|
For example, electricity costs are $1,000 per month plus $0.10per car washed. The company expects to wash 8,200 cars in Augustand to collect an average of $6.90 per car washed. The companyactually washed 8,300 cars in August.
Required:
Calculate the company's activity variances for August.(Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Input all amounts as positive values.)
