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. Please view the partially completed performance report below: A 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. Please view the partially completed performance report below:  A 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 to address flexible budget variances, which means it focuses on significant variances that require management attention. In this case, the 36 inch short variance is the only one that exceeds the threshold for significance, as the others are all within 10% of the flexible budget. Therefore, the company would focus first on addressing the 36 inch short variance.

Johnson Construction Materials Company Has a Sales Office Which Sells