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Exercise $9-9$ Flexible Budget Performance Report $[$LO$3,$ LO$4]$

Auto Lavage is a Canadian company that owns and operates a large automatic carwash facility near Quebec. The following table provides data concerning the company$$s expected costs:

Fixed Cost

per Month Cost per

Car Washed

Cleaning supplies $ $1\mathrm{.}10$

Electricity $ $2,9100\mathrm{.}50$

Maintenance $0\mathrm{.}70$

Wages and salaries $6,1000\mathrm{.}80$

Depreciation $9,700$

Rent $3,500$

Administrative expenses $3,2400\mathrm{.}08$

For example, electricity costs are $$2,910$ per month plus $$0\mathrm{.}50$ per car washed. The company expects to wash $9,400$ cars in October and to collect an average of $$8\mathrm{.}20$ per car washed.

Auto Lavage$$s actual level of activity was $9,500$ cars. The actual revenues and expenses for October are given below:

Auto Lavage

Income Statement

For the Month Ended October $31$

Actual cars washed $9,500$

Sales $ $80,100$

Variable expenses:

Cleaning supplies $10,680$

Electricity $4,796$

Maintenance $6,420$

Wages and salaries $7,850$

Administrative $810$

Fixed expenses:

Electricity $2,990$

Wages and salaries $6,100$

Depreciation $9,700$

Rent $3,500$

Administrative $3,145$

Total expense $55,991$

Net operating income $ $24,109$

Required:

$1.$ Prepare a flexible budget performance report for October. $($Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

$2.$ Prepare a comprehensive performance report for October. Assume that the static budget for October was based on an activity level of $9,400$ cars. $($Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

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