Skip to content

ACCA Applied Knowledge · Management Accounting · Presenting information

A budget report to senior management shows 40 lines of detailed variances for every cost centre. The managing director complains she cannot see what needs attention. Which change to the report would BEST apply the principle of management by exception?

Highlighting only variances beyond a pre-set tolerance, such as 5% of budget, with short commentary best applies management by exception. It focuses the managing director on items needing action instead of burying her in detail, unlike adding more lines or reporting less often.

  1. AHighlight only variances exceeding a pre-set tolerance, such as 5% of budget, with brief commentaryCorrect
  2. BAdd a further 20 lines of analysis for each cost centre
  3. CReplace the variance figures with the previous year's actual results
  4. DSend the report less frequently, such as annually

Explanation

Management by exception directs attention to items that deviate significantly from plan. Reporting only variances beyond a set tolerance, with commentary, makes the report concise and action-focused. Adding more detail worsens overload, and prior-year figures or less frequent reporting do not focus on exceptions.

Did you get it right without looking?

One question tells you little. A timed set on Presenting information shows your real accuracy, how long you take and where you lose marks.

Practise Presenting informationFree diagnostic mock

More Presenting information questions