Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s costs: Fixed Cost per MonthCost per Car WashedCleaning supplies $ 0.80Electricity$ 1,200$ 0.15Maintenance $ 0.20Wages and salaries$ 5,000$ 0.30Depreciation$ 6,000 Rent$ 8,000 Administrative expenses$ 4,000$ 0.10 For example, electricity costs are $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 $4.90 per car washed. The actual operating results for August are as follows: Lavage RapideIncome StatementFor the Month Ended August 31Actual cars washed8,800Revenue$ 43,080Expenses: Cleaning supplies7,560Electricity2,670Maintenance2,260Wages and salaries8,500Depreciation6,000Rent8,000Administrative expenses4,950Total expense39,940Net 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. Do not round intermediate calculations.) Lavage RapideRevenue and Spending VariancesFor the Month Ended August 31Revenue Expenses: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense Net operating income

Solution: Lavage Rapide Revenue and spending Variances For the month ended August 31…

Answered: Fixed Cost per Month Cost per Car…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides data concerning the company’s 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 are $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. Do not round intermediate calculations.)

Lavage Rapide
Revenue and Spending Variances
For the Month Ended August 31
Revenue
Expenses:
Cleaning supplies
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income

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