The Principle of Exceptions Allows Managers to Focus on Correcting

question 25

Multiple Choice

The principle of exceptions allows managers to focus on correcting variances between

• A) standard costs and actual costs
• B) variable costs and actual costs
• C) competitor's costs and actual costs
• D) competitor's costs and standard costs

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Definitions:

Short Run

refers to a period in which at least one input in the production process is fixed and cannot be changed.

Long Run

A period in economics where all factors of production and costs are variable, allowing companies to adjust to new conditions.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the total quantity produced, indicating the cost per unit of product.

Marginal Revenue

The additional income received from selling one more unit of a good or service.