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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:
Fixed Cost per Month Cost per Car Washed
Cleaning supplies $0.80
Electricity $1,200 $0.15
Maintenance $0.20
Wages and salaries $5,000 $0.30
Depreciation $6,000
Rent $8,000
Administrative expenses $4,000 $0.10
For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expects to wash 9,000 cars in August and to collect an average of $4.90 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 8,800

Revenue $43,080
Expenses:
Cleaning supplies 7,560
Electricity 2,670
Maintenance 2,260
Wages and salaries 8,500
Depreciation 6,000
Rent 8,000
Administrative expenses 4,950
Total expense 39,940
Net operating income $3,140
Prepare a flexible budget performance report that shows the company’s revenue and spending variances and activity variances for August.

Respuesta :

anthougo

Answer:

Lavage Rapide

Lavage Rapide

Income Statement

For the Month Ended August 31

                                           Actual  Planning  Flexible          Variances

Cars washed                      8,800      9,000      8,800     Activity    Spending      

Revenue                         $43,080     44,100    43,120    $1,020 U      $40 F

Expenses:

Cleaning supplies              7,560    $7,200   $7,040      $360 U     $520 U

Electricity                            2,670      2,550    2,520       $120  U     $150  U

Maintenance                      2,260       1,800     1,760      $460  U    $500  U

Wages and salaries           8,500      7,700     7,640      $800  U    $860  U

Depreciation                      6,000     6,000     6,000      None         None

Rent                                    8,000     8,000     8,000      None         None

Administrative expenses  4,950     4,900     4,880         $50  U      $70  U

Total expense                 39,940    38,150   37,840     $1,790  U $2,100  U

Net operating income     $3,140   $5,950  $5,280     $2,810      $2,140  U

Explanation:

a) Data and Calculations:

Company's Costs:

                                      Fixed Cost       Cost per

                                      per Month    Car Washed

Cleaning supplies                                    $0.80

Electricity                            $1,200           $0.15

Maintenance                                            $0.20

Wages and salaries          $5,000          $0.30

Depreciation                     $6,000

Rent                                   $8,000

Administrative expenses $4,000           $0.10

Expected number of cars = 9,000 cars

Service price per car wash = $4.90

Actual operating results for August:

Lavage Rapide

Income Statement

For the Month Ended August 31

Actual cars washed 8,800

Revenue                         $43,080

Expenses:

Cleaning supplies              7,560

Electricity                            2,670

Maintenance                      2,260

Wages and salaries           8,500

Depreciation                      6,000

Rent                                    8,000

Administrative expenses  4,950

Total expense                 39,940

Net operating income     $3,140

Planning Budget:

                                      Fixed Cost       Cost per

                                      per Month    Car Washed                           Total

Cleaning supplies                                    $7,200 (9,000 * $0.80)    $7,200

Electricity                            $1,200           $1,350 (9,000 * $0.15)     $2,550

Maintenance                                             $1,800 (9,000 * $0.20)    $1,800

Wages and salaries          $5,000          $2,700 (9,000 * $0.30)    $7,700

Depreciation                     $6,000                                                    $6,000

Rent                                   $8,000                                                    $8,000

Administrative expenses $4,000            $900 (9,000 * $0.10)     $4,900

Flexible budget:

                                      Fixed Cost       Cost per

                                      per Month    Car Washed                            Total

Cleaning supplies                                    $7,040 (8,800 * $0.80)    $7,040

Electricity                            $1,200           $1,320 (8,800 * $0.15)    $2,520

Maintenance                                             $1,760 (8,800 * $0.20)    $1,760

Wages and salaries          $5,000          $2,640 (8,800 * $0.30)    $7,640

Depreciation                     $6,000                                                    $6,000

Rent                                   $8,000                                                    $8,000

Administrative expenses $4,000            $880 (8,800 * $0.10)      $4,880

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