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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   $ 0.40 Electricity $ 1,000 $ 0.08 Maintenance   $ 0.15 Wages and salaries $ 4,700 $ 0.30 Depreciation $ 8,400   Rent $ 1,900   Administrative expenses $ 1,600 $ 0.04   For example, electricity costs should be $1,000 per month plus $0.08 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.30 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 8,300 Revenue $ 53,760 Expenses:   Cleaning supplies 3,780 Electricity 1,626 Maintenance 1,470 Wages and salaries 7,520 Depreciation 8,400 Rent 2,100 Administrative expenses 1,828 Total expense 26,724 Net operating income $ 27,036   Required: Calculate the company's revenue and spending 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   $ 0.40 Electricity $ 1,000 $ 0.08 Maintenance   $ 0.15 Wages and salaries $ 4,700 $ 0.30 Depreciation $ 8,400   Rent $ 1,900   Administrative expenses $ 1,600 $ 0.04   For example, electricity costs should be $1,000 per month plus $0.08 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.30 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 8,300 Revenue $ 53,760 Expenses:   Cleaning supplies 3,780 Electricity 1,626 Maintenance 1,470 Wages and salaries 7,520 Depreciation 8,400 Rent 2,100 Administrative expenses 1,828 Total expense 26,724 Net operating income $ 27,036   Required: Calculate the company's revenue and spending variances for August.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 8CE: Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each...
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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   $ 0.40
Electricity $ 1,000 $ 0.08
Maintenance   $ 0.15
Wages and salaries $ 4,700 $ 0.30
Depreciation $ 8,400  
Rent $ 1,900  
Administrative expenses $ 1,600 $ 0.04

 

For example, electricity costs should be $1,000 per month plus $0.08 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.30 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 8,300
Revenue $ 53,760
Expenses:  
Cleaning supplies 3,780
Electricity 1,626
Maintenance 1,470
Wages and salaries 7,520
Depreciation 8,400
Rent 2,100
Administrative expenses 1,828
Total expense 26,724
Net operating income $ 27,036

 

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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