Exercise 9-14 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 data concerning the companys costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.40
Electricity	$	1,400		$	0.10
Maintenance				$	0.20
Wages and salaries	$	4,200		$	0.30
Depreciation	$	8,300
Rent	$	1,900
Administrative expenses	$	1,500		$	0.03

For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.20 per car washed.

The actual operating results for August appear below.

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,400
Revenue	$	53,560
Expenses:
Cleaning supplies		3,820
Electricity		2,200
Maintenance		1,900
Wages and salaries		7,050
Depreciation		8,300
Rent		2,100
Administrative expenses		1,649
Total expense		27,019
Net operating income	$	26,541

Required:

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

Exercise 9-14 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 data concerning the companys costs:

	Fixed Cost per Month			Cost per Car Washed
Cleaning supplies				$	0.40
Electricity	$	1,400		$	0.10
Maintenance				$	0.20
Wages and salaries	$	4,200		$	0.30
Depreciation	$	8,300
Rent	$	1,900
Administrative expenses	$	1,500		$	0.03

For example, electricity costs are $1,400 per month plus $0.10 per car washed. The company expects to wash 8,300 cars in August and to collect an average of $6.20 per car washed.

The actual operating results for August appear below.

Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed		8,400
Revenue	$	53,560
Expenses:
Cleaning supplies		3,820
Electricity		2,200
Maintenance		1,900
Wages and salaries		7,050
Depreciation		8,300
Rent		2,100
Administrative expenses		1,649
Total expense		27,019
Net operating income	$	26,541

Required:

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