Saylor BUS105 Exam With Confidence Using Practice Dumps

Comprehensive and Detailed Explanation:

The Manufacturing Overhead account is used to track both actual and applied overhead. At the end of the period, the difference is calculated:

If actual > applied → underapplied (debit balance)

If applied > actual → overapplied (credit balance)

Answer: A

In differential analysis (also known as incremental analysis), only costs that differ between alternatives (i.e., relevant costs) are considered. Irrelevant costs—those that do not change as a result of the decision—are excluded.

Rent expenses are typically fixed and would not change whether a particular client is dropped or retained. Therefore, rent expenses are irrelevant to the decision and should be excluded from the analysis.

Relevant costs include:

Consulting fees (B) → Variable costs associated with servicing clients.

Wages payable (C) → May vary depending on staffing levels needed for client workload.

Project management costs (D) → If these are client-specific, they would vary and be relevant.

Saylor Academy – Managerial Accounting (BUS105), Unit 7:

“Relevant costs are those that differ between alternatives. Costs that remain the same regardless of the alternative chosen are irrelevant and should not be considered in the decision.”

(Source: Saylor.org – BUS105: Managerial Accounting, Unit 7, Section 7.1: Relevant Revenues and Costs)

Therefore, rent expenses (A) are the correct answer as they are fixed and irrelevant to this client-based decision.

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Comprehensive and Detailed Explanation:

Management by Exception is a management style that focuses attention and resources on areas where actual results deviate significantly from expected results.

According to Saylor Academy BUS105:

“Management by exception is a principle where managers focus only on significant variances between actual and budgeted results.”

Only Option D reflects a significant unfavorable variance that exceeds a predefined threshold—this is exactly the kind of situation where management by exception would trigger action.

Answer: D