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 $ 0.50 Electricity $ 1,300 $ 0.05 Maintenance $ 0.15 Wages and salaries $ 4,900 $ 0.20 Depreciation $ 8,200 Rent $ 2,000 Administrative expenses $ 1,500 $ 0.04 For example, electricity costs are $1,300 per month plus $0.05 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.40 per car washed.
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 $ 0.50 Electricity $ 1,300 $ 0.05 Maintenance $ 0.15 Wages and salaries $ 4,900 $ 0.20 Depreciation $ 8,200 Rent $ 2,000 Administrative expenses $ 1,500 $ 0.04 For example, electricity costs are $1,300 per month plus $0.05 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.40 per car washed.
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...
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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 | $ | 0.50 | ||||
| Electricity | $ | 1,300 | $ | 0.05 | ||
| Maintenance | $ | 0.15 | ||||
| Wages and salaries | $ | 4,900 | $ | 0.20 | ||
| $ | 8,200 | |||||
| Rent | $ | 2,000 | ||||
| Administrative expenses | $ | 1,500 | $ | 0.04 | ||
For example, electricity costs are $1,300 per month plus $0.05 per car washed. The company expects to wash 8,500 cars in August and to collect an average of $6.40 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 | 8,600 | |
| Revenue | $ | 56,500 |
| Expenses: | ||
| Cleaning supplies | 4,750 | |
| Electricity | 1,695 | |
| Maintenance | 1,515 | |
| Wages and salaries | 6,960 | |
| Depreciation | 8,200 | |
| Rent | 2,200 | |
| Administrative expenses | 1,740 | |
| Total expense | 27,060 | |
| Net operating income | $ | 29,440 |
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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