Management by exception (MBE): which reports exemplify the principle of highlighting only exceptions that require managerial attention?

Introduction / Context:
Management by exception (MBE) focuses attention on variances, outliers, and threshold breaches rather than routine, expected figures. MBE reports surface exceptions that merit action, helping managers allocate time efficiently and respond to risks early. Recognizing examples of MBE reports supports better dashboard and reporting design in MIS environments.

Given Data / Assumptions:

• An MBE report should highlight items outside policy or norms.
• We assess whether specific report types naturally present exceptions.
• The audience is managerial, not purely operational.

Concept / Approach:
An aged accounts receivable report flags overdue receivables by aging buckets (e.g., 30/60/90+ days), spotlighting accounts that violate payment terms—classic exceptions needing collection action. An overtime earnings report surfaces payroll exceptions, such as excessive overtime compared to policy or budget, prompting scheduling or staffing adjustments. Both directly embody MBE by filtering attention to problem areas rather than listing all normal transactions.

Step-by-Step Solution:

Verification / Alternative check:
Standard managerial accounting practices use aged A/R and overtime variance reports as key MBE tools for collections and labor-cost control.

Why Other Options Are Wrong:

• Single-choice options omit the other valid example.
• “Neither” conflicts with well-established MBE use cases.
• “None” is incorrect because both examples fit MBE.

Common Pitfalls:
Designing reports that overwhelm with detail instead of isolating exceptions; failing to include thresholds and clear follow-up actions.

Final Answer:
both (a) and (b)