Exercise 9-13 (Algo) Prepare a Flexible Budget Performance Report [LO9-4]

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 companys costs:

For example, electricity costs should be $1,400 per month plus $0.06 per car washed. The company expects to wash 8,200 cars in August and to collect an average of $6.60 per car washed.

The actual operating results for August are as follows:

Required:

Prepare a flexible budget performance report that shows the companys revenue and spending variances and activity variances for August.

Note: 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.

\begin{tabular}{lrr} & \begin{tabular}{r} Fixed Cost \\ per Month \end{tabular} & \begin{tabular}{c} Cost per \\ Car Washed \end{tabular} \\ Cleaning supplies & & $0.50 \\ Electricity & $1,400 & $0.06 \\ Maintenance & & $0.25 \\ Wages and salaries & $4,300 & $0.40 \\ Depreciation & $8,200 & \\ Rent & $1,800 & \\ Administrative expenses & $1,800 & $0.04 \end{tabular} \begin{tabular}{lr} \multicolumn{2}{c}{ Lavage Rapide } \\ \multicolumn{2}{c}{ Income Statement } \\ For the Month Ended August 31 \\ Actual cars washed \\ Revenue \\ Expenses: \\ Cleaning supplies \\ Electricity & $56,300 \\ Maintenance & 4,600 \\ Wages and salaries & 1,862 \\ Depreciation & 2,290 \\ Rent & 7,940 \\ Administrative expenses & 8,200 \\ Total expense & 2,000 \\ Net operating income & 2,028 \\ \cline { 2 - 2 } \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{11}{|c|}{ Lavage Rapide } \\ \hline \multicolumn{11}{|c|}{ Flexible Budget Performance Report } \\ \hline \multicolumn{11}{|c|}{ For the Month Ended August 31} \\ \hline & \multicolumn{2}{|c|}{\begin{tabular}{l} Actual \\ Results \end{tabular}} & \multicolumn{2}{|c|}{\begin{tabular}{c} Revenue and \\ Spending Variances \end{tabular}} & \multicolumn{2}{|c|}{\begin{tabular}{l} Flexible \\ Budget \end{tabular}} & \multicolumn{2}{|c|}{ Activity Variances } & \multicolumn{2}{|c|}{\begin{tabular}{l} Planning \\ Budget \end{tabular}} \\ \hline Cars washed & & 8,300 & & & & & & & & \\ \hline Revenue & $ & 56,220 & & F & $ & 54,780 & 660 & F & $ & 54,120 \\ \hline \multicolumn{11}{|l|}{ Expenses: } \\ \hline Cleaning supplies & & 4,600 & 450 & U & & 4,150 & 50 & U & & 4,100 \\ \hline Electricity & & 1,862 & 36 & F & & 1,898 & 6 & U & & 1,892 \\ \hline Maintenance & & 2,290 & 215 & U & & 2,075 & 25 & U & & 2,050 \\ \hline Wages and salaries & & 7,940 & 320 & U & & 7,620 & 40 & U & & 7,580 \\ \hline Depreciation & & 8,200 & 0 & None & & 8,200 & 0 & None & & 8,200 \\ \hline Rent & & 2,000 & 200 & U & & 1,800 & 0 & None & & 1,800 \\ \hline Administrative expenses & & 2,028 & 104 & F & & 2,132 & 4 & U & & 2,128 \\ \hline Total expense & & 28,920 & 1,045 & U & & 27,875 & 125 & U & & 27,750 \\ \hline Net operating income & $ & 27,300 & & F & $ & 26,905 & 535 & F & $ & 26,370 \\ \hline \end{tabular}