If sales fall 5% below budget, the sales manager takes no action.If, however, sales fall 20% below forecast, the sales manager and the district manager schedule a sales review meeting.This is an example of:
A) Preventive controls.
B) Management by exception.
C) Intangible standards.
D) Management by objectives.

Question

Quizplus · Accepted Answer

This scenario describes management by exception, where managers only take action if there is a significant deviation from expected performance (sales falling 20% below forecast). This is in contrast to preventive controls, which are put in place to prevent deviations from occurring altogether, and management by objectives, which involves setting specific goals and objectives for employees to work towards. Intangible standards are not relevant in this scenario.

If Sales Fall 5% Below Budget, the Sales Manager Takes