Variances which exceed a certain dollar amount or a certain percentage are the variances which are investigated when using management by exception.

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Management by exception is a technique where managers only focus on variances which exceed a certain threshold or limit. This helps them to prioritize their efforts and resources towards the most significant issues that require action. Typically, these variances are defined based on a certain dollar amount or a certain percentage deviation from the budgeted or expected performance. Therefore, variances that exceed this set threshold are the ones that are investigated and acted upon, while the ones within the acceptable range are monitored but not given as much attention.

Variances Which Exceed a Certain Dollar Amount or a Certain