Which of the following is a way to reduce agency costs? a. Change the decision maker b. Transferring information to the decision maker c. Change the decision maker’s incentives d. All of the above

Change the decision maker's incentives

Explanation:

One of the most common ways most reducing agency costs is change the incentives of the key decision makers. That is, by implementing an incentives scheme for them. This could be financial incentives or non financial

For the financial incentives the most common incentives scheme. For example, the organization can decide that until certain goal and objectives are achieved, the management team would not receive a monetary bonus. That is, tying performance to reward or frown at non performance.

Non-financial incentives the organization can give them

1 New office or workspace

2 Training opportunities

3 Recognition from co-workers

4 Corporate car

Though this might not work effectively as the financial incentive scheme in reducing cost

$764,400

Explanation:

Given that,

Net income under variable costing = $772,200

Beginning inventories = 7,800 units

Ending inventories = 5,200 units

Fixed overhead per unit = $3

Net income under absorption costing:

= Net income under variable costing - [(Beginning inventories - Ending inventories) × Fixed overhead per unit]

= $772,200 - [(7,800 - 5,200) × $3]

= $772,200 - $7,800

= $764,400