What Is the Drawback of Stock Ownership as a Form

question 31

Multiple Choice

What is the drawback of stock ownership as a form of incentive pay?

• A) Financial benefits mostly come when the employee leaves the organization.
• B) Employees have the right to participate in votes by shareholders, hence reducing the negotiating power of the employer.
• C) It causes the employers to lose control over their employees.
• D) The employees will not benefit even if the organization is performing well.
• E) Stock options do not provide any ownership to employees, instead offering an equivalent sum.

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Definitions:

Job-order Costing System

An accounting system that accumulates costs per individual job or project to calculate profitability and costs.

Indirect Labor Cost

Costs related to employees who assist in the production process but do not actively work on the product, such as maintenance staff and supervisors.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, depreciation, and supervision expenses, not directly tied to specific product units.

Job-order Costing System

An accounting method that assigns costs to specific production batches or projects, tracking the direct and indirect costs involved.