Which of the Following Is NOT a Reason Incentive Mechanisms

question 4

Multiple Choice

Which of the following is NOT a reason incentive mechanisms are used in an organization?

• A) Principals who own the firm have an incentive to shirk.
• B) Agents seek to maximize their own utilities.
• C) Workers at every level of an organization,including CEOs,are principals.
• D) Incentive mechanisms work by better aligning the interest of workers with the firm's profit-maximizing goals.
• E) Tournaments induce relatively high-effort levels.

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Definitions:

Activity Variances

The differences between the expected costs of activities and the actual costs, used in managerial accounting to analyze performance.

Meals Served

The total number of meals prepared and provided to customers over a given period, often used in the hospitality or restaurant industry as a performance metric.

Cost Drivers

Factors that cause a change in the cost of an activity, such as machine-hours or labor hours, influencing direct and indirect costs.

Guests

Individuals invited to partake or be present in an event, establishment, or locale.