Problem with Tying Executive Pay to Stock Prices Isthat

question 199

Multiple Choice

problem with tying executive pay to stock prices isthat:

• A)many factors other than executive effort and ability affect stock prices.
• B)executives can manipulate stock prices.
• C)it is a complicated evaluation to make, riddled with strong assumptions.
• D)executives prefer more straightforward compensation schemes that reduce their risk.

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Definitions:

Variable Overhead

Overhead costs that fluctuate with changes in production activity levels, such as utilities or materials used in production.

Labour Rate Variance

The difference between the actual cost of labour and the standard or expected cost of labour.

Sales Volume Variances

Sales volume variances represent the difference between the actual quantity of product sold and the expected quantity sold, indicating market performance or operational efficiency.

Standard Costing

A cost accounting method that assigns expected costs to each unit of production to help managers identify variances between expected and actual costs.