Which of the Following Statements Is False

question 17

Multiple Choice

Which of the following statements is false?

• A) The substantial use of stock and option grants in the 1990s greatly increased managers' pay-for-performance sensitivity.
• B) The optimal level of sensitivity of managers' compensation to the performance of their firms depends on the managers' level of risk aversion, which is hard to measure.
• C) While decreasing managers' risk exposure, increasing the sensitivity of managerial pay and wealth to firm performance does have some negative effects.
• D) In the absence of monitoring, the other way the conflict of interest between managers and owners can be mitigated is by closely aligning their interests through the managers' compensation policy.

Understand the impact of inventory errors on net income.

Comprehend safeguarding measures for inventory control.

Understand the limitations and prohibitions of certain cost flow assumptions under international financial reporting standards (IFRS).

Identify and apply various inventory cost flow assumptions (FIFO, LIFO, Weighted Average).

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Definitions:

Average Variable Cost

Total variable costs divided by the quantity of output, showing the variable cost per unit of output.

Marginal Cost

The price to produce an additional unit of a product or service.

Total Costs

The total expense of manufacturing that encompasses all constant and fluctuating costs.

Average Variable Cost

The cost of labor and materials divided by the quantity of output, representing the variable cost per unit of production.