Which one of the following represents the best effort to reduce the agency problem? Select one: Increasing the salary of the company CEO every time the company opens a new store Giving senior managers bonuses consisting of shares of company whenever the company improves its production efficiency Providing company cars to all managers employed by the firm for more than one year Paying senior managers a cash bonus each year based on the number of people employed by the company
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Which one of the following represents the best effort to reduce the agency problem?
Select one:
Increasing the salary of the company CEO every time the company opens a new store
Giving senior managers bonuses consisting of shares of company whenever the company improves its production efficiency
Providing company cars to all managers employed by the firm for more than one year
Paying senior managers a cash bonus each year based on the number of people employed by the company
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- A new CEO takes control of Do-Da Industries to turn it around (to make it profitable). Based on market research she wants to focus on two specific product lines. By the end of the first year the company exceeded budgeted profits by 18%. The company’s controller knows his annual bonus depends on exceeding budgeted profit and that next year’s performance would unlikely be similar to this year’s. Profit must exceed budget by 10% before the controller’s bonus kicks in. The controller realizes he can accrue some of next year’s expenses and defer some of this year’s revenue while still exceeding this year’s budgeted profit by 10%. Required: Why would the controller want to defer revenues but accrue expenses? Is this ethical? Why?Which of the following is a reason for a company to implement a knowledge management system? Select one: O a. Some of the company's policies and procedures will be revised in the coming year. O b. A new Human Resources manager who is a recent, external hire is telling everyone that a KMS is the way to go and that she used one at her old company. Oc. There is leftover budget money at the end of the year, and the IT department thinks a new software program is the way to spend it. Od. An early retirement program was offered, and many senior managers across the organization are interested in taking advantage of it.Employee retention is a major goal for Dynamic Thermoforming, Inc.Feedback from the employees had focused on the need for a company-sanctioned retirement program. In response, the company will be offering a 401(k) retirement program complete with a number of different investment choices, including some of the top mutual fund families. In addition, the first 3% of an employee's salary contributed would be fully matched by the company. Quentin Avery, a sales manager with Dynamic Thermoforming, decides to put 3% of his $6,000 monthly salary into an international growth fund offered through the new 401(k) plan. The current net asset value is 17.94 and the year-to-date return is plus 4.9%. How many shares will Quentin be able to purchase each month, and what was the net asset value of the fund at the beginning of the year? Quentin will be able to purchase shares per month. (Round to the nearest hundredth as needed.) The net asset value of the fund at…
- Employee retention is a major goal for Dynamic Thermoforming, Inc.Feedback from the employees had focused on the need for a company-sanctioned retirement program. In response, the company will be offering a 401(k) retirement program complete with a number of different investment choices, including some of the top mutual fund families. In addition, the first 3% of an employee's salary contributed would be fully matched by the company. Quentin Avery, a sales manager with Dynamic Thermoforming, decides to put 3% of his $6,000 monthly salary into an international growth fund offered through the new 401(k) plan. The current net asset value is 17.94 and the year-to-date return is plus 4.9%. How many shares will Quentin be able to purchase each month, and what was the net asset value of the fund at the beginning of the year?You begin a new job at Cabrera Medical Supplies. 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MANAGER: At the last board meeting, we established an objective of earning an after-tax profit equal to 20 percent of sales. I need to know the revenue that we need to earn in order to meet this objective, given that we have 250,000 to spend on the promotional campaign. Once I have estimated sales in units, we then need to outline a promotional campaign that conforms to our budget and that will take us where we want to be. However, to compute the targeted sales revenue, I need to know the unit sales price, the unit variable cost, and the associated fixed production and support costs. I also need to know the tax rate. b. MANAGER: We have problems with our procurement process. Our accounts payable department is spending 80 percent of its time resolving discrepancies between the purchase order, receiving order, and suppliers invoice. Incorrect part numbers on the purchase orders, incorrect quantities ordered, and wrong parts sent (or the incorrect quantity) are just a few examples of sources of discrepancies. A complete redesign of the process has been suggested, which will allow us to eliminate virtually all of the errors and, at the same time, significantly reduce the number of clerks needed in purchasing, receiving, and accounts payable. This redesign promises to significantly reduce costs, decrease lead time, and increase customer satisfaction. c. MANAGER: This overhead cost report indicates that we have spent significantly more on inspection, purchasing, and production than was budgeted. An investigation has revealed that the source of the problem is faulty components from suppliers. A supplier evaluation has revealed that by selecting five suppliers with the best quality records (out of 15 currently used), the number of defective components will be dramatically reduced, thus producing significant overhead savings by reducing the demand for inspections, reordering, and rework. d. MANAGER: A large local firm has approached me and has offered to sell us one of the components used in our small enginesa component that we are currently producing internally. I need to know costs that we would avoid if this component is purchased so that I can assess the economic merits of this offer. e. MANAGER: Currently, our deluxe lawn mower is losing money. We need to increase profits. I would like to know how much our profits would be if we reduce our variable costs by 50 per mower while maintaining our current sales volume. Also, marketing claims that if we increase advertising expenditures by 1,000,000 and cut prices by 15 percent, we can increase the number of mowers sold by 25 percent. I would like to know which approach offers the most profit, or if a combination of the approaches may be best. f. MANAGER: We are implementing a major quality improvement program. We will be increasing the investment in prevention and detection activities with the expectation of driving down both internal and external failure costs. I expect to see trend reports for all categories of quality costs. I want to see if improving quality really does reduce costs and improve profitability. g. MANAGER: Our engineering design department has proposed a new design for our product. The new design promises to reduce post-purchase costs and, as a consequence, increase market share. I need to know the cost of producing this new design because it uses some new components and requires some different manufacturing processes. I would then like to have a projected income statement based on the new market share and new production costs. The planned selling price will be the same, or maybe even 10 percent lower. Projections based on the two price scenarios would be needed. h. MANAGER: My engineers have said that by redesigning our two main production processes, we can reduce move time by 90 percent and wait time by 85 percent. This would decrease cycle time and virtually eliminate the need to carry finished goods inventories. On-time deliveries would also increase dramatically. This would produce cost savings of nearly 20,000,000 per year. Market share and revenues would also increase. Required: 1. Describe each of the four managerial responsibilities. 2. Identify the managerial activity or activities applicable for each scenario, and indicate the role of accounting information in the activity.
- Discuss the advantages and disadvantages of the following forms of managerial compensation in terms of mitigating agency problems, that is, potential conflicts of interest between managers and shareholders.a. A fixed salary.b. Stock in the firm that must be held for five years.c. A salary linked to the firm’s profits.Internal production supervisors of a company’s product line would be MOST likely to ask which of the following questions? Select answer from the options below 1.How much profit can the company expect to earn this year? 2.What can the company afford to pay its employees this year? 3.Which product line is the least profitable and should be eliminated? 4.How much should the company charge for its products to maximize its profit?Reed Kohler is in his final year of employment as controller for Quality Sales Corporation: he hopes to retire next year. As a member of top management, Kohler participates in an attractive company bonus plan. The overall size of the bonus is a function of the firm's net income before bonus and income taxes - the larger the net income, the larger the bonus. Due to a slowdown in the economy due to Coronavirus, the company has encountered difficulty in managing its cash flow. The company auditors have recommended that the company change its inventory method from FIFO to LIFO . The change would cause a significant increase in the cost of goods sold for the year. Kohler thinks the company shouldn't switch to LIFO b/c its inventory quantities are too large. After expressing this opinion to the firm's treasurer, Kohler is stunned at the treasurer's reply "Reed, I can't believe that after all these years with the company, you put your personal interests ahead of the companies…
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