Paying Efficiency Wages Helps Firms Reduce the Problem of Moral

question 72

Multiple Choice

Paying efficiency wages helps firms reduce the problem of moral hazard by:

• A)generating additional profits that can be used to improve working conditions.
• B)keeping labor unions from organizing workers in the firm.
• C)encouraging unsupervised workers to maintain a high level of productivity.
• D)providing an incentive for the best-qualified workers to remain with the firm.

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Definitions:

Fixed Overhead Budget Variance

This term refers to the difference between the budgeted fixed overhead costs and the actual fixed overhead costs incurred.

Standard Fixed Manufacturing Overhead Rate

The predetermined rate used to apply fixed manufacturing overhead to products, based on an estimate of total fixed manufacturing costs and an allocation basis.

Actual Fixed Overhead Costs

The real costs incurred for fixed overhead during a specified accounting period.

Budgeted Activity

The planned level of output or activity for a specific period, used for planning and control purposes.