Johnson Construction Materials Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. Below is the partially completed performance report. The company uses management by exception to address flexible budget variances. On which variance would the company focus first?

Question

Johnson Construction Materials Company has a sales office which sells concrete culvert pipe to property developers. The sales office is a revenue center and must prepare a monthly performance report. Below is the partially completed performance report.  The company uses management by exception to address flexible budget variances. On which variance would the company focus first?

Quizplus · Accepted Answer

The company uses management by exception, which means it focuses on significant variances only. The largest variance in terms of dollar amount is the 36-inch short variance, so the company would focus on that first.

Johnson Construction Materials Company Has a Sales Office Which Sells