Which of the following is an example of agency costs?
A) cost of labor
B) raw material cost
C) monitoring expenditures cost
D) factory rent

Question

Quizplus · Accepted Answer

Agency costs refer to the costs incurred by a firm to ensure that its agents (such as managers and employees) are acting in the best interests of the firm's owners. Monitoring expenditures cost is an example of agency costs as it includes the cost of supervising and monitoring the actions of agents to ensure that they are behaving in a way that is consistent with the firm's goals. Cost of labor, raw material cost, and factory rent are not examples of agency costs.

Which of the Following Is an Example of Agency Costs