A Key Advantage of Incentive Plans Is That They Represent

question 100

True/False

A key advantage of incentive plans is that they represent variable costs that are linked to the realization of goals as opposed to a fixed cost such as salary that may be largely unrelated to true performance (i.e., output).

---

Definitions:

Machine-Hours

A measure of production volume or activity based on the number of hours machines are operated.

Markup

The amount added to the cost of a product to cover overhead and profit, expressed as a percentage of the cost.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, from maintenance to quality control.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead costs to products, calculated before the fiscal period begins based on estimated costs and activity levels.