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2 years ago

What do economists call the situation where a hired manager does not have the same interests as the owners of the business?

1 answer:

6 0

When a hired manager does not have the same interests as the owners of the business, economists call it a principal-agent problem.

A principal-agent problem occurs when there is a conflict of interest between the owner(s) of the asset and the hired representative. This happens when a degree of control and decision-making is delegated to the hired individual. The risk that they will make decisions that are contrary to the owner’s best interest is called agency costs and is carried by the owner. It is the owners' responsibility to provide incentives for the hired manager or individual to act in favor of their same interests.

While the options are incorrect because:

Conquest and control: A hired manager is only delegated partial control and limited decision-making. Which can affect the interests of the owner but has neither the ownership of the asset nor carries the liability of loss and profit.
A financial problem: Financial problems refer to monetary problems including, excess debt, lack of savings, struggles with daily living, and bad spending habits.
A financial intermediary problems: A financial intermediary is a third party hired to manage and conduct financial transactions between two parties and are legally obliged to follow certain policies and guidelines.

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You might be interested in

Chae Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the firs

nasty-shy [4]

Answer:

If costs and percentage completion of these units in beginning inventory were:

Cost Percent Complete

Materials costs $7,900 60%

Conversion costs $6,900 30%

A total of 8,100 units were started and 7,600 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month:

Materials costs $137,900

Conversion costs $323,900

The ending inventory was 80% complete with respect to materials and 75% complete with respect to conversion costs.

Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to at least three decimal places.

The cost per equivalent unit for materials for the month in the first processing department is closest to $17.03

Explanation:

Weighted-average method is used to make an inventory valuation, taking average values for both the merchandise in stock and for the costs of merchandise sold.

But in this case, since you have unfinished units, you must take the equivalent to calculate the unit cost.

Materials:

Units completed: 7,600

Units in process: 1,200 * 80% = 960

Equivalent production units: 7,600 +, 960 = 8560

Cost at start: 7,900

Added costs in the period: 137,900

Total cost: 7900 + 137,900 = 145,800

So: 145,800 / 8,560 = 17.03 is the equivalent unit cost per product

4 0

4 years ago

Structuring a Keep-or-Drop Product Line Problem with Complementary Effects Shown below is a segmented income statement for Hicko

MAVERICK [17]

Answer:

Contribution margin for :

STRIP PLANK Income Statement

$ 360,000 $ 190,000 Total Net Sales

-$ 225,000 -$ 120,000 Variable Cost

$ 135,000 $ 70,000 Contributing Margin

It's more effective to keep the parquet product line, the company get

an extra return of $5,000.

Explanation:

With all the product line operating these are the results:

STRIP PLANK PARQUET Total Income Statement

$ 400,000 $ 200,000 $ 300,000 $ 900,000 Total Net Sales

-$ 225,000 -$ 120,000 -$ 250,000 -$ 595,000 Variable Cost

$ 175,000 $ 80,000 $ 50,000 $ 305,000 Contributing Margin

-$ 5,000 -$ 20,000 -$ 50,000 -$ 75,000 Machine Rent

-$ 15,000 -$ 10,000 -$ 20,000 -$ 45,000 Supervision

-$ 35,000 -$ 10,000 -$ 25,000 -$ 70,000 Depreciation

$ 120,000 $ 40,000 -$ 45,000 $ 115,000 Segment Margin

If the company keeps the parquet line will get worst result during the year.

STRIP PLANK PARQUET Total Income Statement

$ 360,000 $ 190,000 $ 0,000 $ 550,000 Total Net Sales

-$ 225,000 -$ 120,000 $ 0,000 -$ 345,000 Variable Cost

$ 135,000 $ 70,000 $ 0,000 $ 205,000 Contributing Margin

-$ 5,000 -$ 20,000 -$ 10,000 -$ 35,000 Machine Rent

-$ 15,000 -$ 10,000 $ 0,000 -$ 25,000 Supervision

-$ 35,000 -$ 10,000 $ 0,000 -$ 45,000 Depreciation

$ 80,000 $ 30,000 -$ 10,000 $ 100,000 Segment Margin

6 0

4 years ago

At December 31, 2020, Sager Co. had 1,200,000 shares of common stock outstanding. In addition, Sager had 450,000 shares of prefe

devlian [24]

Answer:

$3.48

Explanation:

Net income ÷Shares of common stock outstanding + Preferred stock convertible shares of common stock.

Net income 6,800,000

Shares of common stock outstanding 1,200,000

Preferred stock convertible 750,000

Hence:

$6,800,000/ ($1,200,000 + $750,000)

=$6,800,000/$1,950,000

=$3.48

Therefore the diluted earnings per share for 2021 is $3.48

3 0

4 years ago

3 uses of money supply

zalisa [80]

Answer:

Money serves as a medium of exchange, as a store of value, and as a unit of account.

7 0

3 years ago

For the current year ($ in millions), Central Park Corp. had $80 in pretax accounting income. This included bad debt expense of

KatRina [158]

Answer:

$69

Explanation:

Calculation for Central Park's taxable income

Pretax accounting income $80

Less Temporary differenceDepreciation (15)

($35 – $20)

Bad debt expense $4

($6 – $2)

Taxable income$69

($80-$15+$4)

Therefore Central Park's taxable income will be $69

8 0

3 years ago