Under the Business Judgment Rule

question 30

Multiple Choice

Under the Business Judgment Rule:

• A) Managers have to act in good faith
• B) Managers might have to prove how their decisions was fair to the shareholders.
• C) Managers will not be held liable for the damage their decisions cause the company.
• D) All of the above

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Definitions:

Variable Overhead

Costs of overhead that vary directly with the level of production, such as utilities or indirect materials.

Power Cost

The expense associated with the consumption of electrical energy by a company's operations.

Efficiency Variances

These variances measure the difference between the actual input used to produce a good or service and the standard input expected to be used, showing how efficiently resources are utilized.

Rate Variances

Differences between actual rates paid for inputs and the standard expected rates, often analyzed in cost accounting for labor, materials, and overhead costs.