Which of the Following Best Describes Profit Sharing

question 26

Multiple Choice

Which of the following best describes profit sharing?

• A) The employer pays employees an incentive based on their merit.
• B) The employer pays employees an incentive based on labour cost savings.
• C) The employer pays employees a bonus based on the overall productivity of their particular work group.
• D) The employer pays employees a special current or deferred sum based on the profits of the enterprise.

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Definitions:

Variable Overhead

Costs of production that fluctuate with the level of output, such as utility expenses for machinery, which increase with more extensive production.

Direct Materials

Direct materials are raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the product's cost.

Direct Labor-Hours

The full sum of time spent by employees directly engaged in the process of creating products.

Variable Overhead

Costs that change with production volume but are not directly tied to specific units, such as utilities for the manufacturing plant.