Waycross Construction Company Has a Pipeyard Operation Which Is Run

question 65

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:
$\begin{array}{|l|r|r|r|r|r|r|}\hline \text { Cost Center } & & \text { Flexible } & \text { Flexible Budget } \\\hline \text { Performance Report } & \text { Actual } & \text { Budget } & \text { Variance } & \text { U/F } & \% \text { variance } & \text { U/F } \\\hline \text { Wages \& benefits } & \$ 81,200 & \$ 80,000 \\\hline \text { Office lease expense } & 42,060 & 45,000 \\\hline \text { Depreciation expense } & 39,600 & 42,000 \\\hline \text { Insurance expense } & 33,490 & 30,000 \\\hline \text { Other expense } & 7,120 & 8,000 \\\hline & \$ 203,470 & \$ 205,000 \\\hline\end{array}$
-
Waycross uses management by exception. On which variance will Waycross focus first?

• A) Wages & benefits
• B) Insurance expense
• C) Office lease expense
• D) Depreciation expense

---

Definitions:

Disrupt

To cause disorder or turmoil in something, interrupting or preventing it from continuing as usual.

Thought Processes

The mental activities involved in understanding, processing, and communicating information.

Biological Rhythm

Natural cycles of physical, emotional, or intellectual changes that the body goes through, such as circadian rhythms.

Fluctuation

An irregular rising and falling in number or amount; a variation.