Lavage Rapide is a Canadian company that owns and operates a large automatic car wash...
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Accounting
Lavage Rapide is a Canadian company that 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
$ 0.50
Electricity
$ 1,100
$ 0.07
Maintenance
$ 0.25
Wages and salaries
$ 4,200
$ 0.20
Depreciation
$ 8,500
Rent
$ 2,000
Administrative expenses
$ 1,700
$ 0.03
For example, electricity costs should be $1,100 per month plus $0.07 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.00 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
8,100
Revenue
$ 50,100
Expenses:
Cleaning supplies
4,500
Electricity
1,630
Maintenance
2,240
Wages and salaries
6,160
Depreciation
8,500
Rent
2,200
Administrative expenses
1,840
Total expense
27,070
Net operating income
$ 23,030
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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