Which of the Following Would Be Best Considered to Be

question 85

Multiple Choice

Which of the following would be best considered to be an agency conflict problem in the behavior of the following financial managers?

• A) Bill chooses to pursue a risky investment for the company's funds because his compensation will substantially rise if it succeeds.
• B) Sue instructs her staff to skip safety inspections in one of the company's factories, knowing that it will likely fail the inspection and incur significant costs to fix.
• C) James ignores an opportunity for his company to invest in a new drug to fight Alzheimer's disease, judging the drug's chances of succeeding as low.
• D) Michael chooses to enhance his firm's reputation at some cost to its shareholders by sponsoring a team of athletes for the Olympics.

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Definitions:

Activity Variances

The differences between planned or standard costs of activities and the actual costs incurred, useful for management in budgeting and performance evaluation.

Patient-visits

Refers to the total number of times patients see a healthcare provider or visit a healthcare facility for services.

Planning Budget

A budget prepared for a specific level of activity, often used for planning and coordinating actions.

Activity Variances

Differences between planned or budgeted amounts of costs or revenues and actual amounts incurred, attributable to specific activities.