Exercise 9-12 (Algo) Revenue and Spending Variances [LO9-3] 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: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Fixed Cost per Month $1,100 $4,600 $ 8,100 $1,900 $1,700 Lavage Rapide Income Statement. For the Month Ended August 31 $ 0.05 For example, electricity costs should be $1,100 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $5.90 per car washed. The actual operating results for August are as follows: Actual cars washed Revenue Expenses: Rent Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Administrative expenses Total expense Net operating income $0.50 $ 0.07 $ 0.30 $ 0.40 8,300 $50,480 4,600 1,644 Cost per Car Washed 2,700 8,240 8,100 2,100 2,010 29,394 $ 21,086 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.)
Exercise 9-12 (Algo) Revenue and Spending Variances [LO9-3] 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: Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses Fixed Cost per Month $1,100 $4,600 $ 8,100 $1,900 $1,700 Lavage Rapide Income Statement. For the Month Ended August 31 $ 0.05 For example, electricity costs should be $1,100 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $5.90 per car washed. The actual operating results for August are as follows: Actual cars washed Revenue Expenses: Rent Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Administrative expenses Total expense Net operating income $0.50 $ 0.07 $ 0.30 $ 0.40 8,300 $50,480 4,600 1,644 Cost per Car Washed 2,700 8,240 8,100 2,100 2,010 29,394 $ 21,086 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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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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![Exercise 9-12 (Algo) Revenue and Spending Variances [LO9-3]
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:
Cleaning supplies
Rent
Administrative
expenses
Lavage Rapide
Income Statement.
Electricity
Maintenance
Wages and salaries $4,600
Depreciation
$ 8,100
$ 1,900
$ 1,700
For example, electricity costs should be $1,100 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in
August and to collect an average of $5.90 per car washed.
The actual operating results for August are as follows:
For the Month Ended August 31
Actual cars washed
Fixed Cost per
Month
$1,100
Revenue
Expenses:
Cleaning supplies
Rent
Revenue
Expenses:
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income
Cleaning supplies
Electricity
Maintenance.
Wages and salaries
Depreciation
Lavage Rapide
Revenue and Spending Variances
For the Month Ended August 31
Administrative expenses
Total expense
Net operating income
$ 0.50
Cost per Car
Washed
$ 0.07
$ 0.30
$ 0.40
$ 0.05
8,300
$ 50,480
4,600
1,644
2,700
8,240
8,100
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.)
2,100
2,010
29,394
$ 21,086](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0c41a864-51cb-43b6-b9fc-ba5644a94a83%2F3510f99f-bd23-4934-a416-e96897e85f0f%2Fzib4of9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 9-12 (Algo) Revenue and Spending Variances [LO9-3]
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:
Cleaning supplies
Rent
Administrative
expenses
Lavage Rapide
Income Statement.
Electricity
Maintenance
Wages and salaries $4,600
Depreciation
$ 8,100
$ 1,900
$ 1,700
For example, electricity costs should be $1,100 per month plus $0.07 per car washed. The company expects to wash 8,200 cars in
August and to collect an average of $5.90 per car washed.
The actual operating results for August are as follows:
For the Month Ended August 31
Actual cars washed
Fixed Cost per
Month
$1,100
Revenue
Expenses:
Cleaning supplies
Rent
Revenue
Expenses:
Electricity
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
Net operating income
Cleaning supplies
Electricity
Maintenance.
Wages and salaries
Depreciation
Lavage Rapide
Revenue and Spending Variances
For the Month Ended August 31
Administrative expenses
Total expense
Net operating income
$ 0.50
Cost per Car
Washed
$ 0.07
$ 0.30
$ 0.40
$ 0.05
8,300
$ 50,480
4,600
1,644
2,700
8,240
8,100
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.)
2,100
2,010
29,394
$ 21,086
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