Solved

Westhaven Company Has a Warehousing Unit Which Operates as a Cost

question 116

Multiple Choice

Westhaven Company has a warehousing unit which operates as a cost center. They prepare monthly performance reports.
The report for February is shown here:
$\begin{array}{|l|r|r|r|r|r|r|}\hline \text { Cost Center } & & \text { Flexible } & \text { Flexible Budget } \\\hline \text { Performance Report } & \text { Actual } & \text { Budget } & \text { Variance } & \text { U/F } & \% \text { variance } & \text { U/F } \\\hline \text { Salary \& benefits } & \$ 119,000 & \$ 120,000 & \$ 1,000 & F & 0.8 \% & F \\\hline \text { Rent expense } & 94,500 & 90,000 & 4,500 & U & 5.0 \% & U \\\hline \text { Depreciation expense } & 23,200 & 24,000 & 800 & F & 3.3 \% & \text { F } \\\hline \text { Depreciation expense } & 23,200 & 24,000 & 800 & F & 3.3 \% & \text { F } \\\hline \text { Supply expense } & 11,890 & 12,000 & 110 & \text { F } & 0.9 \% & \text { F } \\\hline \text { Other expense } & 8,120 & 8,000 & 120 & \mathrm{U} & 1.5 \% & \mathrm{U} \\\hline& \$ 256,710 & \$ 254,000 & \$ 2,710 & \mathrm{U} & 1.1 \% & \mathrm{U} \\\hline\end{array}$

Westhaven uses the management by exception approach. On which of the following variances would the company focus first for investigation and explanation?

Definitions:

Stratified Squamous Epithelium

A type of protective tissue consisting of layers of flat cells found in areas such as the skin, mouth, and esophagus.

Simple Columnar Epithelium

A type of epithelium consisting of a single layer of tall, closely packed cells, which line organs such as the stomach and intestines.

Transitional Epithelium

Transitional epithelium is a type of tissue found lining organs that can stretch, such as the bladder; it allows for expansion and retraction without tearing.

Transitional Epithelium

A type of epithelial tissue characterized by its ability to stretch and change shape, found lining organs such as the bladder.