Question

per month 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 required: calculate the companys revenue and spending variances for august. (indicate the effect of each variance by selecting \f\ for favorable, \u\ for unfavorable, and
one\ for no effect (i.e., zero variance). input all amounts as positive values. do not round intermediate calculations.) lavage rapide revenue and spending variances for the month ended august 31 revenue $ 40 u expenses: cleaning supplies 520 u electricity 150 u maintenance u wages and salaries u depreciation none rent none administrative expenses u total expense u net operating income u

Explanation:

Step1: Calculate revenue variance

Revenue variance = Actual revenue - Flexible budget revenue.
Flexible budget revenue = \(4.90\times8800 = 43120\).
Actual revenue = \(43080\).
Revenue variance = \(43080 - 43120=- 40\) (Unfavorable, since actual < budget).

Step2: Calculate cleaning supplies variance

Flexible budget for cleaning supplies = \(0.80\times8800=7040\).
Actual cleaning supplies = \(7560\).
Variance = \(7560 - 7040 = 520\) (Unfavorable, since actual > budget).

Step3: Calculate electricity variance

Flexible budget for electricity=\(1200+0.15\times8800=1200 + 1320=2520\).
Actual electricity = \(2670\).
Variance=\(2670 - 2520=150\) (Unfavorable, since actual > budget).

Step4: Calculate maintenance variance

Flexible budget for maintenance=\(0.20\times8800 = 1760\).
Actual maintenance=\(2260\).
Variance=\(2260 - 1760 = 500\) (Unfavorable, since actual > budget).

Step5: Calculate wages and salaries variance

Flexible budget for wages and salaries=\(5000+0.30\times8800=5000 + 2640=7640\).
Actual wages and salaries=\(8500\).
Variance=\(8500 - 7640=860\) (Unfavorable, since actual > budget).

Step6: Calculate administrative expenses variance

Flexible budget for administrative expenses=\(4000+0.10\times8800=4000 + 880=4880\).
Actual administrative expenses=\(4950\).
Variance=\(4950 - 4880 = 70\) (Unfavorable, since actual > budget).

Step7: Calculate total expense variance

Total flexible budget expense=\(7040+2520 + 1760+7640+6000+8000+4880\)
\(=7040+2520=9560;9560+1760 = 11320;11320+7640=18960;18960+6000=24960;24960+8000=32960;32960+4880=37840\).
Actual total expense=\(39940\).
Total expense variance=\(39940 - 37840=2100\) (Unfavorable, since actual > budget).

Step8: Calculate net operating income variance

Flexible budget net operating income=\(43120-37840 = 5280\).
Actual net operating income=\(3140\).
Net operating income variance=\(3140 - 5280=-2140\) (Unfavorable, since actual < budget).

Answer:

Revenue: \(\$40\) U
Cleaning supplies: \(\$520\) U
Electricity: \(\$150\) U
Maintenance: \(\$500\) U
Wages and salaries: \(\$860\) U
Administrative expenses: \(\$70\) U
Total expense: \(\$2100\) U
Net operating income: \(\$2140\) U