Principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs.

Question

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The principle of exceptions states that managers should focus on correcting significant variances or exceptions between standard costs and actual costs, rather than spending time and resources investigating every small variance. This allows managers to focus on areas where improvements can have the greatest impact on the success of the organization.

Principle of Exceptions Allows Managers to Focus on Correcting Variances