Agency costs are an integral part of agency relationships. they are a key concern in the shareholder/management relationship in that agency cost results in a reduction in the value of the company because of the administration costs in establishing agencies 2. shareholders view a company that operates as an agent to another company as being more risky,and therefore they are willing to pay less for shares in a company 3. agency costs result in a reduction in the value of the company because management pursues its own interest 4. establishment of agency relationships require extensive legal and contractual agreements, which can be very costly
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Agency costs are an integral part of agency relationships. they are a key concern in the shareholder/management relationship in that
- agency cost results in a reduction in the value of the company because of the administration costs in establishing agencies
2. shareholders view a company that operates as an agent to another company as being more risky,and therefore they are willing to pay less for shares in a company
3. agency costs result in a reduction in the value of the company because management pursues its own interest
4. establishment of agency relationships require extensive legal and contractual agreements, which can be very costly
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