What Is a Disadvantage of a Merit Pay System

question 60

Multiple Choice

What is a disadvantage of a merit pay system?

• A) It does not relate the rewards to economic conditions.
• B) It cannot be used effectively with performance appraisals.
• C) Comparative pay is not considered in its evaluation.
• D) It does not provide rewards for performance in all the dimensions measured in the organization's performance management system.
• E) It can quickly become expensive for the company.

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Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed units of production, making them comparable to fully completed units.

Conversion Costs

The sum of direct labor costs and manufacturing overhead costs incurred to convert raw materials into finished goods.

Completion Ratios

A measure used to evaluate the extent to which a task, project, or goal has been completed, often expressed as a percentage.

Direct Materials

Raw materials that are directly traceable and allocable to the production of specific goods or services.