To Avoid the Agency Problem, Managers Should Take Actions

question 2

Multiple Choice

To avoid the agency problem, managers should take actions:

• A) Which adds value to the firm.
• B) Only after the president has approved them.
• C) Only if they increase the market share of the firm.
• D) Which add to the size of the firm's workforce.
• E) Only if management jobs will not be jeopardized.

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Definitions:

Direct Labor Costs

Expenses related to employees who directly produce a product or provide a service, such as wages for assembly line workers.

Work in Process Inventory

Inventory that includes materials and labor that are currently in the production process but not yet completed.

Materials Price Variance

The difference between the actual cost of direct materials and the standard cost, reflecting how effectively a company is purchasing materials.

Materials Quantity Variance

A financial metric used in cost accounting to measure the difference between the actual quantity of materials used in production and the expected quantity.