Which of the Following Is NOT Normally Regarded as Being

question 28

Multiple Choice

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

• A) To enable the firm to borrow at a below-market interest rate.
• B) To make it easier to grant stock options to employees.
• C) To help prevent a hostile takeover.
• D) To help retain valued employees.
• E) To increase worker productivity.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate indirect costs to products or services, calculated before the accounting period begins based on estimated costs and activity levels.

Direct Labor-hour

A metric that calculates the total number of hours worked by employees directly involved in manufacturing a product or providing a service.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual units of production, based on a related activity base.

Machine-hours

A measure of the amount of time machines are used in the production process, often used as an allocation base for applying manufacturing overhead.