When should variances be investigated? Explain the meaning of 'management by exception', discuss why it is important for the management process, and provide an example of a 'range... When should variances be investigated? Explain the meaning of 'management by exception', discuss why it is important for the management process, and provide an example of a 'range of acceptability'.
Understand the Problem
The question is asking for a discussion on when variances should be investigated in management, the concept of 'management by exception', its importance in the management process, and an example of a 'range of acceptability'.
Answer
Investigate variances outside of set ranges. 'Management by exception' means addressing significant differences, focusing management efforts on key areas. E.g., variances >5% need review.
Variances should be investigated when they fall outside a pre-established 'range of acceptability', indicating significant differences from expected results. 'Management by exception' focuses on addressing only significant discrepancies. It enhances efficiency by allowing managers to focus on critical areas. For example, if cost variances exceed 5%, they may require investigation.
Answer for screen readers
Variances should be investigated when they fall outside a pre-established 'range of acceptability', indicating significant differences from expected results. 'Management by exception' focuses on addressing only significant discrepancies. It enhances efficiency by allowing managers to focus on critical areas. For example, if cost variances exceed 5%, they may require investigation.
More Information
'Management by exception' helps streamline management processes by allowing managers to focus resources on areas showing significant variances, reducing unnecessary interventions.
Tips
Common mistakes include not setting clear thresholds or ranges, leading to wasted managerial effort on minor variances.
Sources
- Management by Exception: What is It and How Does it Work? - Pricefx - pricefx.com
- Management by exception definition - AccountingTools - accountingtools.com
AI-generated content may contain errors. Please verify critical information
