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 company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,200 $ 0.09 Maintenance $ 0.15 Wages and salaries $ 4,500 $ 0.40 Depreciation $ 8,100 Rent $ 1,800 Administrative expenses $ 1,600 $ 0.02 For example, electricity costs should be $1,200 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.10 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 8,400 Revenue $ 52,730 Expenses: Cleaning supplies 7,140 Electricity 1,917 Maintenance 1,485 Wages and salaries 8,180 Depreciation 8,100 Rent 2,000 Administrative expenses 1,666 Total expense 30,488 Net operating income $ 22,242 Required: Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August.
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 company’s costs: Fixed Cost per Month Cost per Car Washed Cleaning supplies $ 0.80 Electricity $ 1,200 $ 0.09 Maintenance $ 0.15 Wages and salaries $ 4,500 $ 0.40 Depreciation $ 8,100 Rent $ 1,800 Administrative expenses $ 1,600 $ 0.02 For example, electricity costs should be $1,200 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.10 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 8,400 Revenue $ 52,730 Expenses: Cleaning supplies 7,140 Electricity 1,917 Maintenance 1,485 Wages and salaries 8,180 Depreciation 8,100 Rent 2,000 Administrative expenses 1,666 Total expense 30,488 Net operating income $ 22,242 Required: Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 estimates concerning the company’s costs:
| Fixed Cost per Month | Cost per Car Washed | |
|---|---|---|
| Cleaning supplies | $ 0.80 | |
| Electricity | $ 1,200 | $ 0.09 |
| Maintenance | $ 0.15 | |
| Wages and salaries | $ 4,500 | $ 0.40 |
| $ 8,100 | ||
| Rent | $ 1,800 | |
| Administrative expenses | $ 1,600 | $ 0.02 |
For example, electricity costs should be $1,200 per month plus $0.09 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.10 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 | 8,400 |
|---|---|
| Revenue | $ 52,730 |
| Expenses: | |
| Cleaning supplies | 7,140 |
| Electricity | 1,917 |
| Maintenance | 1,485 |
| Wages and salaries | 8,180 |
| Depreciation | 8,100 |
| Rent | 2,000 |
| Administrative expenses | 1,666 |
| Total expense | 30,488 |
| Net operating income | $ 22,242 |
Required:
Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August.
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