Use the Following Information for the Next 3 Questions

question 23

Multiple Choice

Use the following information for the next 3 questions.
Chicago Division has a required rate of return of 15%. The weighted average cost of capital is 10%. Information for Chicago Divisions operations over the past 2 years follows.
-Which of the following is most likely to be an example of an agency cost caused by incongruent goals?

• A) Employee time working in a target costing team
• B) Loss on a special order because of unanticipated production problems
• C) Managers' time to negotiate a transfer price
• D) Decline in sales from a change in consumer preferences

---

Definitions:

Operate

To control the functioning of; manage or run.

Small Business

An independently owned and operated company that is limited in size and in revenue depending on the industry.