management by exception”
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Managers who properly apply the concept called “management by exception” will: *
Investigate only favorable variances.
Investigate only unfavorable variances.
Investigate only variances of a certain size or scope.
Always investigate unfavorable and favorable variances regardless of size.
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- What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor.During the control function, the measurements taken of the performance must be accurate enough to see _______________________________. only positive results deviations and variances the primary focus only the negative resultsWhat is the cause of an unfavorable volume variance? Does the volume variance convey any meaningful information to managers?
- When might an unfavorable variance be a good outcome?(Appendix 10A) Which of the following items describes practices surrounding the recording of variances? a. All inventories are typically carried at standard. b. Unfavorable variances appear as debits. c. Favorable variances appear as credits. d. Immaterial variances are typically closed to Cost of Goods Sold. e. All of these.What two factors must be considered when breaking down a variance into its components?
- What causes an unfavorable variance?Acme Inc. has the following information available: A. Compute the material price and quantity, and the labor rate and efficiency variances. B. Describe the possible causes for this combination of favorable and unfavorable variances.This standard is set at a level that may be reached with reasonable effort. A. ideal standard B. attainable standard C. unattainable standard D. variance from standard
- Identify several causes of an unfavorable material price variance.Which of the following statements is true of performance reporting? A. Responsibility reports should focus on the person responsible for unfavorable variances, rather than information. B. Every variance, regardless of magnitude, must be investigated by the managers. C. Managers should not be held accountable for uncontrollable variances. D. Only unfavorable variances in the reports should be explained.What characteristics of the variance pattern shown in the report should draw the controller’s attention, regardless of the usual investigation rule? Which of the following is the best reason to also follow up on favorable variances? Bias in investigation targets and subsequent reports is reduced. Favorable variances occur more often as activity levels rise. Production efficiencies may be able to be replicated elsewhere in the organization.
