Costs Associated with the Conflicts of Interest Between the Bondholders

question 40

Multiple Choice

Costs associated with the conflicts of interest between the bondholders and the shareholders of a corporation are called

• A)legal costs.
• B)bankruptcy costs.
• C)administrative costs.
• D)agency costs.

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Definitions:

Machine-Hours

A measure of the amount of time machines are operated in the production of goods, used as a basis for allocating manufacturing overhead in cost accounting.

Overhead Applied

The portion of overhead costs allocated to individual products or services based on the predetermined overhead rate.

Manufacturing Overhead Applied

The allocation of estimated manufacturing overhead costs to individual units of production based on a predetermined rate.

Machine-Hours

A measure of the amount of time machines are operated, used as a basis for allocating manufacturing overhead costs in some costing systems.