Product Diversification Provides Two Benefits to Managers That Do Not

question 124

Multiple Choice

Product diversification provides two benefits to managers that do not accrue to shareholders: __________ and __________.

• A) greater experience in a wider range of industries; lessening of managerial employment risk
• B) the manager frequently invests in the acquired firm, which allows him or her extensive profits; the manager can frequently buy excess assets divested by the acquired firm
• C) the manager's supervisory needs are lowered; the manager is allowed greater time to oversee a wider range of activities
• D) the opportunity for higher compensation through firm growth; a reduction in managerial employment risk

Understand the application of overhead rates based on different allocation bases like machine hours and direct labor hours.

Grasp the concept of activity cost pools and their significance in activity-based costing.

Analyze the impact of allocating overhead costs on product pricing and profitability.

Differentiate between various overhead allocation methods and their suitability for different types of production processes.

---

Definitions:

Test Construction

The process of designing assessments to measure specific abilities, knowledge, or traits accurately and reliably.

Empirically Constructed

Developed or based on observations, experiments, and evidence rather than theory or pure logic.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect in a certain context, used as a default position until evidence suggests otherwise.

Correlation

A measure of the relationship between two variables, indicating how one may predict or relate to the other.