Chapter 9 - Flexible budgets - In-Class Activities
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Exercise 9-8 Preparing a Flexible Budget
Auto Lavage is a Canadian company that owns and operates a large automatic carw
The following table provides data concerning the company’s costs:
$ 0.70 $ 1,400 0.10 0.30 4,700 0.40 8,300 2,100 Administrative 1,800 0.05 The company expects to charge customers an average of $5.90 per car washed.
Required:
Prepare a flexible budget for October assuming either 8,000 or 9,000 cars are washe
AUTO LAVAGE INC.
Flexible Budget
For the Month Ended October 31
Per Unit
Cars Washed
Number of units
8,000 9,000 Sales
$ 5.90 $ 47,200 $ 53,100 Variable expenses
Cleaning supplies
0.70 5,600 6,300 Electricity
0.10 800 900 Maintenance
0.30 2,400 2,700 Wages and salaries
0.40 3,200 3,600 Administrative
0.05 400 450 Total variable expenses
1.55 12,400 13,950 Contribution margin
$ 4.35 $ 34,800.00 $ 39,150.00 Fixed expenses
Wages and salaries
4,700 4,700 Rent
2,100 2,100 Depreciation
8,300 8,300 Electricity
1,400 1,400 Administrative
1,800 1,800 Total fixed expenses
18,300 18,300 Operating income
$ 16,500 $ 20,850 Fixed Cost per Month
Cost per Car Washed
Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent
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wash facility near Quebec. ed.
Exercise 9-9 Flexible Budget Performance Report
Auto Lavage is a Canadian company that owns and operates a large automatic c
$ 0.70 $ 1,400 0.10 0.30 4,700 0.40 8,300 2,100 Administrative 1,800 0.05 For example, electricity costs are $1,400 per month plus $0.10 per car washed. T
Auto Lavage’s actual level of activity was 8,100 cars. The actual revenues and e
below:
Auto Lavage
Income Statement
For the Month Ended October 31
Actual cars washed
8,100 Sales
$ 49,300 Variable expenses
Cleaning supplies
6,075 Electricity
891 Maintenance
2,187 Wages and salaries
3,402 Administrative
486 Fixed expenses
Electricity
1,450 Wages and salaries
4,700 Depreciation
8,300 Rent
2,100 Administrative
1,745 Total expense
31,336 Net operating income
$ 17,964 Required:
The following table provides data concerning the company’s expected costs:
Fixed Cost per Month
Cost per Car Washed
Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent 8,000 cars in October and to collect an average of $5.90 per car washed.
AUTO LAVAGE INC.
Flexible Budget Performance Report
For the Month Ended October 31
Per unit
Actual
Flexible Budg
Number of units
based on an activity level of 8,000 cars. Indicate the effect of each variance.
AUTO LAVAGE INC.
Comprehensive Performance Report
For the Month Ended October 31
Actual
Flexible Budget Variance
Number of units
1. Prepare a flexible budget performance report for October. Indicate the effect o
Flexible Budget
2. Prepare a comprehensive performance report for October. Assume that the st
Flexible Budget
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carwash facility near Quebec. The company expects to wash expenses for October are given
get Variance
Sales Volume Variance
of each variance.
tatic budget for October was Static Budget
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Exercise 9-10 Flexible Budget Performance Report
Air Assurance Corporation provides on-site air quality testing services. The compa
data concerning its operations:
Revenue
$ 275 $ 24,750 Technician wages
8,600 8,450 Mobile lab
4,900 29 7,960 (5,216 fixed) Office expenses
2,700 3 2,850 (2,556 fixed) Advertising expenses
1,580 1,650 Insurance
2,870 2,870 Miscellaneous expenses
960 2 465 (269 fixed) The company uses the number of jobs as its measure of activity. For example, mo
should be $4,900 plus $29 per job, and the actual mobile lab operating expenses expected to work 100 jobs in March, but actually worked 98 jobs.
Required:
Prepare a comprehensive performance report for March. Assume that the static b
AIR ASSURANC CORPORATION
Comprehensive Performance Report
For the Month Ended March 31
Actual
Flexible Budget Variance
Jobs
Fixed Component per Month
Variable Component per Job
Actuals for March
level of 100 jobs. Indicate the effect of each variance.
Flexible Budget
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any has provided the following obile lab selling and administrative expenses for March were $7,960. The company budget for March was based on an activity Sales Volume Variance
Static Budget