When managers apply the process of "management by exception":
A) they take action when there is a significant variance between planned and actual results.
B) they take action when there is a variance of any size or amount between planned and actual results.
C) they are allowed to use standard costs rather than actual costs on financial statements issued to decision makers.
D) they are not required to compute the standard cost of making a product.

Question

Quizplus · Accepted Answer

Management by exception is a process where managers take action only when there is a significant deviation between planned and actual results. This helps them to focus their attention on areas that require corrective action, rather than getting bogged down in small variances. Therefore, option A is the correct choice as it specifies a significant variance. Option B is incorrect as it suggests taking action for any variance, which is not the case in management by exception. Options C and D are also incorrect as they are not related to the process of management by exception.

When Managers Apply the Process of "Management by Exception