Business, 20.02.2020 22:27 mrsali35

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 expected to wash 9,000 cars in August and to collect an average of $4.90 per car washed.

The actual operating results for August appear below.

Lavage Rapide Income Statement For the Month Ended August 31

Actual cars washed 8,800
Revenue $43,080

Required:
Compute the company's revenue and spending variances for August.
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

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