Union Company's corporate payroll department is a cost center, and prepares monthly performance reports. Union uses the management by exception approach, based on the dollar amounts of the variances. Based on the performance report for the payroll department shown below, on which of the following variances would the company focus first for investigation and explanation?

Question

Quizplus · Accepted Answer

Salary and benefits have the largest unfavorable variance of $25,000, indicating that the actual costs were significantly higher than the budgeted costs. This variance would be the first to investigate as it has the greatest impact on the overall performance of the payroll department. The other variances have either favorable variances or smaller unfavorable variances in comparison.

Union Company's Corporate Payroll Department Is a Cost Center, and Prepares