If a Firm Hires Lazy Employees

question 70

Multiple Choice

If a firm hires lazy employees,

• A) it must pay them differently or hard-working employees will engage in moral hazard.
• B) it must pay them more or hard-working employees will engage in moral hazard.
• C) it must fire them before their laziness spreads to hard-working employees.
• D) the lazy employees make hard-working employees look good.

---

Definitions:

Standard Cost Variances

Differences between the planned (standard) costs and the actual costs incurred.

Cost of Goods Sold

The cost of goods sold (COGS) is the direct cost attributable to the production of goods sold by a company, including the cost of materials and labor.

Standard Cost System

An accounting system that uses estimated costs for material, labor, and overhead to assess performance and control costs.

Materials Quantity Variance

The variance between the real amount of materials consumed during manufacturing and the anticipated amount, as per norms.