Management by exception is the practice of concentrating on areas not operating

Question

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun) and placing less attention on areas operating as anticipated.

true false

A cost function is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost.

true false

When choosing among cost drivers, managers trade off level of detail, accuracy, feasibility, and costs of estimating functions.

true false

Crimson Services, Inc., employs 8 individuals. They are all paid $16.50 per hour. How would total costs of personnel be classified?

Variable Cost Fixed Cost Mixed Cost Sunk Cost

Explanation / Answer

Solution:

True, Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun) and placing less attention on areas operating as anticipated

True, A cost function is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost.

True, When choosing among cost drivers, managers trade off level of detail, accuracy, feasibility, and costs of estimating functions.

As employees are paid on per hours basis, thereffore personnel cost shall be classified as variable cost.

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