When a Corporate Manager Makes an Honest Error in Judgment

question 6

Multiple Choice

When a corporate manager makes an honest error in judgment, the business judgment rule directs that the manager will:

• A) be liable for corporate losses.
• B) not be liable and a court will step in to correct the manager's mistake.
• C) not be liable if he acted with care and in good faith.
• D) be liable for all losses resulting from the error.

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Definitions:

Transportation Cost

Expenses associated with moving goods or materials from one location to another, including freight charges and fuel costs.

Cost from Theft

The financial impact incurred by a business due to pilferage, shoplifting, burglary, or other forms of theft.

Holding Cost

The expenses associated with storing unsold goods, including warehousing, insurance, deterioration, and loss.

Material Cost

The expense associated with raw materials and components needed for producing a product.