Accounting · Variance Reporting
Variance reporting to management is typically governed by the principle of 'Management by Exception'. Which of the following best exemplifies this principle in variance reporting?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Variance reports are only generated at the end of the financial year for statutory auditing purposes.
- 2All favorable variances are ignored, and only adverse variances are reported to management.
- 3A detailed analysis is provided only for variances that exceed a predetermined, materiality threshold.✓
- 4A daily report is generated detailing all material costs incurred, regardless of the difference from the standard.
Correct answer
A detailed analysis is provided only for variances that exceed a predetermined, materiality threshold.
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