AC6550 – Managerial Accounting – 202227
- Chapter 1: problems 1, 8 (pg. 16-17)
Questions
1.The following is a quote from a New York Times article: “If a company makes product donations to the school—computers for instance—then the image of a company goes up as graduate students use the company’s products.” Does such action square with a company’s objective of profit maximization? Discuss.
2.Is the maximization of profit margin (profit as a percentage of total sales) a valid financial objective of a corporation? Discuss.
3.“The growth of consumer information organizations, legal requirements, and warranty requirements has caused significant increases in the cost of customer satisfaction. Thus, it is no longer useful to talk about profit maximization as a company objective.” Comment on this quote.
4.Discuss the difference between profit maximization and shareholder wealth maximization. Which of these is a more comprehensive statement of a company’s economic objectives?
5.Explain the term satisfice as it relates to the operations of a large corporation.
6.Discuss the meaning of the term principal-agent problem. Why does this problem exist?
7.Why may corporate managers not specifically aim at profit (or wealth) maximization for their companies?
8.What are some of the forces that cause managers to act in the interest of shareholders?
Chapter 2: problems 1, 5 (pg. 36)
Questions
The following is a quote from a New York Times article: “If a company makes product donations to the school—computers for instance—then the image of a company goes up as graduate students use the company’s products.” Does such action square with a company’s objective of profit maximization? Discuss.
Is the maximization of profit margin (profit as a percentage of total sales) a valid financial objective of a corporation? Discuss.
“The growth of consumer information organizations, legal requirements, and warranty requirements has caused significant increases in the cost of customer satisfaction. Thus it is no longer useful to talk about profit maximization as a company objective.” Comment on this quote.
Discuss the difference between profit maximization and shareholder wealth maximization. Which of these is a more comprehensive statement of a company’s economic objectives?
Explain the term satisfice as it relates to the operations of a large corporation.
Discuss the meaning of the term principal-agent problem. Why does this problem exist?
Why may corporate managers not specifically aim at profit (or wealth) maximization for their companies?
What are some of the forces that cause managers to act in the interest of shareholders?