Waycross Construction Company Has a Pipeyard Operation Which Is Run

question 2

Multiple Choice

Waycross Construction Company has a pipeyard operation which is run as a cost center. They are preparing a performance report for the month of March and have provided the data below:
$\begin{array}{|l|r|r|r|r|r|r|}\hline \text { Cost Center } & & \text { Flexible } & \text { Flexible Budget } \\\hline \text { Performance Report } & \text { Actual } & \text { Budget } & \text { Variance } & \text { U/F } & \% \text { variance } & \text { U/F } \\\hline \text { Wages \& benefits } & \$ 81,200 & \$ 80,000 \\\hline \text { Office lease expense } & 42,060 & 45,000 \\\hline \text { Depreciation expense } & 39,600 & 42,000 \\\hline \text { Insurance expense } & 33,490 & 30,000 \\\hline \text { Other expense } & 7,120 & 8,000 \\\hline & \$ 203,470 & \$ 205,000 \\\hline\end{array}$
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How much is the percentage variance for Wages and benefits?

• A) 2.2 % F
• B) 2.2 % U
• C) 1.5% F
• D) 1.5% U

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Definitions:

Labour and Overhead

Combined costs associated with the workforce (labour) and indirect expenses (overhead) necessary for production but not directly tied to specific units of product.

Process Costing System

An accounting method used where production is continuous, assigning costs to units of product based on the processes they undergo.

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and cost of goods sold based on the average cost of all similar items in the inventory.

Process Costing System

An accounting method used where goods are produced in a continuous process, costs are averaged over the units produced to determine per unit cost.