Management by exception means that managers focus attention on the most significant differences between actual costs and standard costs.

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A company shows a $$40,000$ unfavorable direct labor rate variance and a $$20,000$ unfavorable direct labor efficiency variance. If the company's standard cost of direct labor is $$400,000,$ the actual cost of direct labor is $$340,000.$

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The purchasing department is responsible for the price paid for materials.