Which of the following statements about management by exception is incorrect?
A) Managers concentrate on results that are outside the accepted parameters.
B) There is no need to investigate variances that are less than 20% of the budgeted amount.
C) Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount.
D) Many companies use a combination of percentages and dollar amounts.

Question

Quizplus · Accepted Answer

There is no standard threshold for investigating variances, and it varies from company to company. Some companies may investigate variances that are less than 1% of the budgeted amount, while others may set a higher threshold of 10% or 15%. Therefore, statement B is incorrect as it sets a specific threshold of 20% which may not apply to all companies.

Which of the Following Statements About Management by Exception Is