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
$ 0.80
Electricity
$ 1,200
$ 0.15
Maintenance
$ 0.20
Wages and salaries
$ 5,000
$ 0.30
Depreciation
$ 6,000
Rent
$ 8,000
Administrative expenses
$ 4,000
$ 0.10
For example, electricity costs should be $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 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
8,800
Revenue
$ 43,080
Expenses:
Cleaning supplies
7,560
Electricity
2,670
Maintenance
2,260
Wages and salaries
8,500
Depreciation
6,000
Rent
8,000
Administrative expenses
4,950
Total expense
39,940
Net operating income
$ 3,140
Required:
Calculate the company's revenue and spending variances for August. (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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