Look at the following performance report:

Requirement 

1. On which variances should the manager of the Mexican sauces product line focus his or her efforts, according to the management by exception principle?
For these variances, compute the variance as a percent of the budgeted amount, and suggest some questions the manager may want to investigate.

Transcribed Image Text:

MANAGER - MEXICAN SAUCES Quarterly Responsibility Report (in millions of dollars) Variance Favorable/ Revenues and Expenses Sales revenue Budget Actual (Unfavorable) 79 $ 84 $ 5 Cost of goods sold (36) (29) 7 Gross profit 43 55 12 Marketing expenses (12) (10) 2 Research and development expenses (3) (4) (1) Other expenses (4) (2) 2 Operating income 24 S 39 $ 15