Question

When using management by exception, the purchasing manager should be questioned for which of the following variances?

A) direct materials efficiency
B) variable overhead efficiency
C) direct materials cost
D) direct labor efficiency

Answer 1

When using management by exception, the purchasing manager should be questioned for direct materials cost, direct materials efficiency, and direct labor efficiency variances.

Step-by-step explanation:

When using management by exception, the purchasing manager should be questioned for the following variances:

1. Direct materials cost: This variance measures the difference between the actual cost of direct materials used and the standard cost of direct materials that should have been used.
2. Direct materials efficiency: This variance measures the difference between the actual quantity of direct materials used and the standard quantity of direct materials that should have been used.
3. Direct labor efficiency: This variance measures the difference between the actual hours of direct labor used and the standard hours of direct labor that should have been used.

The purchasing manager should be questioned about these variances in order to identify any significant deviations from the standards and take appropriate corrective actions.