Lavage Rapide is a Canadian company that owns and operates a

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

  

For example, electricity costs are $1,200 per month plus $0.06 per car washed. The company expected to wash 8,300 cars in August and to collect an average of $6.60 per car washed.

  

  

  

Compute 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.)

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

Solution

Actual Revenue and spending variances Flexible budget Cars washed 8400 8400 Revenue 56880 1440 F 55440 Expenses: Cleaning supplies 7140 420 U 6720 Electricity 1668 36 F 1704 Maintenance 1900 220 U 1680 Wages and salaries 7250 330 U 6920 Depreciation 8200 0 None 8200 Rent 2000 200 U 1800 Administrative expenses 1632 104 F 1736 Total expenses 29790 1030 U 28760 Net operating income 27090 410 F 26680