3
Lavaye Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table
provides data concerning the company's costs:
Fixed Cost
Cost per
per Month
Car Washed
Cleaning supplies
$ 0.60
5
points
Electricity
$ 1,100
$ 0.05
Maintenance
$ 0.25
Wages and salaries
$ 4,200
$ 0.20
Depreciation
$ 8,100
Rent
$ 1,900
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Administrative expenses
$ 1,300
$ 0.02
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References
For example, electricity costs are $1,100 per month plus $0.05 per car washed. The company expects to wash 8,000 cars in August
and to collect an average of $6.80 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
8,100
Revenue
$ 56,500
Expenses:
Cleaning supplies
5,300
Electricity
1,470
Maintenance
2,240
Wages and salaries
6,160
Depreciation
8,100
Rent
2,100
Administrative expenses
1,360
Total expense
26,730
Net operating income
$ 29,770
Required:
Calculate the company's revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for