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# Last month, the budgeted level of activity was 1,090 cars washed and the actual level of activity was 1,080 cars washed. The cost formula for the washing expenses is \$3.30 per car washed plus \$18,500 per month.

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Fixed cost per month Cost per car washed
Cleaning supplies \$0.70
Electricity \$1,300 \$0.08
Maintenance \$0.15
wages and salaries \$4,900 \$0.20
Depreciation \$8,400
Rent \$1,900

For example. electricity costs are \$1,300 per month plus \$0.08 per car washed. The company expects to wash 8,000 cars in August and to collect an average Of \$6.60 per car washed.
The actual operating results for August appear below.

Lavage Rapide Income Statement For the Month Ended August 31

Actual car washed 8100
Revenue 54,900

Expenses:
Cleaning supplies 6,100
Electricity 1910
Maintenance 1,440
Wages and salaries 6860
Depreciation 8,400
Rent 2100
Total expense 28170
Net operating income 26,190

Required:
Prepare a flexible budget performance report that shows the company's revenue and spending variances and activity variances for August.

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Flexible Budget Performance Report for August:

Flexible       Actual                    Variances

Budget       Budget     Spending  Activity  Total

Activity levels                         8,100          8,100

Revenue                           \$53,460    \$54,900                                  \$1,440

Cleaning supplies              \$5,670       \$6,100                          (430)

Electricity                             \$1,948           1,910                             38

Maintenance                        \$1,215         1,440                         (225)

Wages and salaries           \$6,520        6,860                         (340)

Depreciation                      \$8,400         8,400                              0

Rent                                    \$1,900          2,100       (\$200)

Total expenses               \$27,658    \$28,170        (\$200)    (\$852) (1,052)

Net operating income    \$25,802   \$26,190                                     \$388

Explanation:

a) Data and Calculations:

Fixed cost      Cost per

per month    car washed

Cleaning supplies                                     \$0.70

Electricity                             \$1,300          \$0.08

Maintenance                                             \$0.15

Wages and salaries           \$4,900          \$0.20

Depreciation                      \$8,400

Rent                                    \$1,900

Total costs                        \$18,100            \$1.18

Flexible costs:

Cleaning supplies                                     \$0.70  * 8,100 =   \$5,670

Electricity                             \$1,300          \$0.08  * 8,100 =    \$1,948

Maintenance                                             \$0.15   * 8,100 =     \$1,215

Wages and salaries           \$4,900          \$0.20   * 8,100 =   \$6,520

Administrative expenses  \$1,600           \$0.05   * 8,100 =  \$2,005

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