The principle of exceptions allows managers to
A) focus on correcting variances between standard costs and actual costs.
B) focus on correcting variances between variable costs and actual costs.
C) focus on correcting variances between competitor's costs and actual costs.
D) focus on correcting variances between competitor's costs and standard costs.

Question

Quizplus · Accepted Answer

The principle of exceptions refers to the idea that managers should focus on correcting significant deviations from standard costs or performance targets, rather than trying to monitor and control every detail of operations. Therefore, the correct option is A, which focuses on correcting variances between standard costs (the expected or planned costs of producing a product) and actual costs (the actual costs incurred in the production process). Options B and D are incorrect because they refer to different types of variances (variable costs vs standard costs vs competitor's costs) that may not be relevant to the principle of exceptions. Option C is also not relevant because comparing a company's costs to those of competitors is not necessarily an effective way to identify exceptions or opportunities for improvement within the company's own operations.

The Principle of Exceptions Allows Managers to