Confronted with Agency Problems,which of the Following Is(are)challenge(s)for Principals

question 17

Multiple Choice

Confronted with agency problems,which of the following is(are) challenge(s) for principals?

• A) Shape the behavior of agents so that they act in accordance with the goals set by principals
• B) Reduce the information asymmetry between agents and principals
• C) Develop mechanisms for removing agents who do not act in accordance with the goals of principals
• D) Develop mechanisms for removing agents who mislead principals
• E) All of these are challenges for principals

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Definitions:

Prime Cost

The combined cost of direct materials and direct labor that are directly involved in the manufacturing of a product.

Direct Labour

The expenses related to workers who are directly engaged in creating products or services.

Manufacturing Overhead

Covers indirect costs related to the production process, such as factory salaries, utilities, and rent, that are not directly tied to direct labor or materials.

Conversion Cost

Refers to expenses incurred in the process of transforming raw materials into finished goods, encompassing both labor and overhead costs in manufacturing.