Heter and Co

question 43

Multiple Choice

Heter and Co., a multinational firm, invited groups of employees to suggest strategies for reducing cost. The firm implemented one of the strategies suggested by a group and made huge gains. If the firm uses the Scanlon plan to distribute the gains, the firm is most likely to:

• A) distribute the majority of the total gain to its executives.
• B) distribute about one-third of the total cost savings among its employees.
• C) distribute the cost savings to the entire organization.
• D) distribute the total gain equally and exclusively among all the members of the group that came up with the strategy.

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Definitions:

Profit Center

A business unit or department which is treated as a separate entity for the purpose of calculating its profitability.

Cost Center

A segment within an organization that is responsible for incurring costs, without directly contributing to the company’s income.

Sales Journal

A record of sales transactions where credit sales are recorded.

Gross Profit

The financial metric that represents the difference between sales revenue and the cost of goods sold, before deducting overheads, payroll, taxation, and interest payments.