Murphy Construction Materials Company has a sales office that sells concrete culvert pipes to property developers

Question

The sales office is a revenue center and prepares a monthly responsibility report. The partially completed responsibility report is provided.

Revenue Center Responsibility Report
Product
Type Actual Sales
Revenue Flexible
Budget
Variance U/F Flexible Budget Sales
Volume Variance U/F Static Budget
40 inch $31,700 $30,750 $40,800
36 inch long 40,150 42,200 33,000
36 inch short 36,200 33,100 31,000
32 inch 19,100 20,000 28,400

The company uses management by exception to address flexible budget variances. On which product type would the company first focus?
A) 40 inch
B) 36 inch long
C) 36 inch short
D) 32 inch

Answer 1

C .C)
Product Type Actual Sales
Revenue Flexible Budget
Variance U/F Flexible
Budget
40 inch $31,700 $950 F $30,750
36 inch long $40,150 $2,050 U $42,200
36 inch short $36,200 $3,100 F $33,100
32 inch $19,100 $900 U $20,000