Which of the following statements is true regarding 'management by exception'?
A) It is rarely used in variance analysis.
B) It forces managers to investigate all variances,regardless of size.
C) It requires the use of flexible budgets.
D) It requires managers to calculate standard costs but not actual costs.

Question

Quizplus · Accepted Answer

Management by exception is a technique where managers focus on investigating and addressing variances that are significant or exceptional in nature, while ignoring those that are expected or within normal range. Flexible budgets are used to identify such variances as they allow for adjustments based on changes in business activity levels. Therefore, option C is correct. Options A, B, and D are incorrect as they are not consistent with the concept of management by exception.

Which of the Following Statements Is True Regarding 'Management by Exception