Lavage Rapide is a Canadiancompany that owns and operates alarge automatic car wash facility nearMontreal. The following tableprovides estimates concerning thecompany's costs: Fixed Cost perMonth Cost per Car WashedCleaning supplies $ 0.80 Electricity $1,200 $0.15 Maintenance $ 0.20 Wagesand salaries $5,000 $ 0.30 Depreciation$6,000 Rent $ 8,000 Administrativeexpenses $4,000 $ 0.10 For example,electricity costs should be $1,200 permonth plus $0.15 per car washed. Thecompany expects to wash 9,000 carsin August and to collect an averageof $4.90 per car washed. The actualoperating results for August are asfollows: Lavage Rapide IncomeStatement For the Month EndedAugust 31 Actual cars washed 8,800Revenue $ 43,080 Expenses: Cleaningsupplies 7,560 Electricity 2,670Maintenance 2,260 Wages and salaries8,500 Depreciation 6,000 Rent 8,000Administrative expenses 4,950 Totalexpense 39,940 Net operating income$3,140 Required: Calculate thecompany's revenue and spendingvariances for August. (Indicate theeffect of each variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zerovariance). Input all amounts aspositive values.) Required: Prepare aflexible budget performance reportthat shows the company's revenueand spending variances and activityvariances for August. (Indicate theeffect of each variance by selecting -F* for favorable, "U" for unfavorable,and "None" for no effect (i.e., zerovariance). Input all amounts aspositive values.)

Variance-Variance Analysis helps an organization to understand the variations in the actual results…

Require Prepare a exible budget performance report hat shows the company's revenue and spending variances and activity variances for August. (Indicate the effect of each variance by selecting is for favorable for unfavorable

Require Prepare a exible budget performance report hat shows the company's revenue and spending variances and activity variances for August. (Indicate the effect of each variance by selecting is for favorable for unfavorable

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 4EA: Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on...

See similar textbooks

Similar questions

Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)
Adama Company incurred the following costs.Indicate to which account Adama would debit each of the costs. 1. Sales tax on factory machinery purchased $5,000 Select the account to be debited Prepaid InsuranceLand ImprovementsLandEquipmentBuilding 2. Painting of and lettering on truck immediately upon purchase 700 Select the account to be debited EquipmentPrepaid InsuranceLandLand ImprovementsBuilding 3. Installation and testing of factory machinery 2,000 Select the account to be debited BuildingLandLand ImprovementsPrepaid InsuranceEquipment 4. Real estate broker’s commission on land purchased 3,500 Select the account to be debited BuildingPrepaid InsuranceLand ImprovementsEquipmentLand 5. Insurance premium paid…
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 Mages and salaries Depreciation Rent Administrative expenses For example, electricity costs should be $1,200 per month plus $0.10 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.50 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 Revenue Expenses Cleaning supplies Electricity Maintenance Wages and salaries Depreciation Fixed Cost per Month $1,200 $ 4,400 $8,100 $ 2,100 $1,800 Rent Administrative expenses Total expense Bet operating income Cost per Car Washed $0.80 $0.10 $ 0.20 $0.30 8,400 $56,050 7,140 2,000 1,900 7,250 0,100 2,300 2,032 30,722 $ 25,328 $ 0.04 Required: Calculate the company's revenue and spending…
Zachary Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. $ 272,000 Cost of materials (13,600 Units x $20) Labor (13,600 Units x $30) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs 408,000 29,000 74,000 12,000 79,000 Total cost to make 13,600 engines $ 874,000 *The equipment has a book value of $106,000 but its market value is zero. Required a. Determine the maximum price per unit that Zachary would be willing to pay for the engines. b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 17,900 units. (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit
Easton Company makes and sells scooters. Easton incurred the following costs in its most recent fiscal year: Cost Items Appearing on the Income Statement Materials cost ($10 per unit) Company president's salary Depreciation on manufacturing equipment Salaries of administrative personnel Labor cost ($4 per unit) Advertising costs (150,000 per year) Shipping and handling ($500 per year) Research and development costs Real estate taxes on factory Inspection costs Easton can currently purchase the scooters it makes from Weston Company. If the company purchases the scooters, Easton would still continue to use its own logo, sales staff, and advertising programs. If Easton outsources the scooters to Weston, which of the following costs would be relevant to the outsourcing decision? Multiple Choice X Materials cost Shipping and handling Inspection costs All of these answers are correct.
Arctic Air Inc. manufactures cooling units for commercial buildings. The price and cost of goods sold for each unit are as follows: Category Per Unit Dollar Amount Price $60,000 Cost of goods sold Gross profit 28,000 32,000 In addition, the company incurs selling and administrative expenses of $226,250. The company wishes to assign these costs to its three major customers, Gough Industries, Breen Inc., and The Martin Group. These expenses are related to three major nonmanufacturing activities: customer service, project bidding, and engineering support. The engineering support is in the form of engineering changes that are placed by the customer to change the design of a product. The budgeted activity costs and activity bases associated with these activities are: Budgeted Activity Cost Activity Base $51,500 Number of service requests Activity Customer service Project bidding Engineering support 64,000 Number of bids 110,500 Number of customer design changes Total costs 226,000…
Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (15,000 Units x $13) Labor (15,000 Units x $25) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines $ 195,000 375,000 40,000 74,000 19,000 80,000 783,000 The equipment has a book value of $107,000 but its market value is zero. Allocated portion of corporate-level facility-sustaining costs Total cost to make 15,000 engines Required a. Determine the maximum price per unit that Rundle would be willing to pay for the engines. b. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,000 units. (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit
Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: Rent on manufacturing facility $ 250,000 Office manager's salary 150,000 Wages of factory machine operators 110,000 Depreciation on manufacturing equipment 50,000 Insurance and taxes on selling and administrative offices 30,000 Direct materials purchased and used 170,000 Based on the above information, the amount of period costs shown on Steuben's income statement is: Multiple Choice $150,000. $180,000. $430,000. S 30,000.
Adama Company incurred the following costs.Indicate to which account Adama would debit each of the costs. 1. Sales tax on factory machinery purchased $5,000 Select an account to be debited 2. Painting of and lettering on truck immediately upon purchase 700 Select an account to be debited 3. Installation and testing of factory machinery 2,000 Select an account to be debited 4. Real estate broker’s commission on land purchased 3,500 Select an account to be debited 5. Insurance premium paid for first year’s insurance on new truck 880 Select an account to be debited 6. Cost of landscaping on property purchased 7,200 Select an account to be…
Fanning Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,100 Units × $22) $ 288,200 Labor (13,100 Units × $14) 183,400 Depreciation on manufacturing equipment* 38,000 Salary of supervisor of engine production 74,000 Rental cost of equipment used to make engines 24,000 Allocated portion of corporate-level facility-sustaining costs 81,000 Total cost to make 13,100 engines $ 688,600 *The equipment has a book value of $97,000 but its market value is zero. Required Determine the maximum price per unit that Fanning would be willing to pay for the engines. Determine the maximum price per unit that Fanning would be willing to pay for the engines, if production increased to 18,550 units? (For all requirements, round your intermediate calculations and final…
Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: Rent on manufacturing facility $ 250,000 Office manager's salary 150, 000 Wages of factory machine operators 110,000 Depreciation on manufacturing equipment 50,000 Insurance and taxes on selling and administrative offices 30, 000 Direct materials purchased and used 170,000 Based on the above information, which of the following would not be treated as a product cost: Multiple Choice Depreciation on manufacturing equipment Wages of factory machine operators Office manager's salary Rent expense incurred on manufacturing facility Su Ac Su
Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,400 Units × $16) $ 214,400 Labor (13,400 Units × $17) 227,800 Depreciation on manufacturing equipment* 26,000 Salary of supervisor of engine production 76,000 Rental cost of equipment used to make engines 10,000 Allocated portion of corporate-level facility-sustaining costs 86,000 Total cost to make 13,400 engines $ 640,200 *The equipment has a book value of $96,000 but its market value is zero. Required Determine the maximum price per unit that Rundle would be willing to pay for the engines. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,050 units?