Variances that are large in absolute dollar value or as a percent of budgeted amounts are generally considered exceptional in a management by exception approach.

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This is correct. In management by exception, managers focus their attention on variances that are significant in size or unusual in nature, rather than reviewing every small deviation from the budget. Large variances, whether in absolute dollar value or as a percentage of budgeted amounts, are typically considered exceptional and therefore warrant further investigation and action from management.

Variances That Are Large in Absolute Dollar Value or as a Percent