Which of the Following Statements About Earnings-At-Risk Pay Plans Is

question 61

Multiple Choice

Which of the following statements about earnings-at-risk pay plans is true?

• A) Earnings-at-risk plans involve upside risk for the employer.
• B) Earnings-at-risk plans set base pay at or above the market rate.
• C) Salespeople who work on straight commissions are paid through at earnings-at-risk plan.
• D) Earnings-at-risk plans all have caps that prevent the employer from having to pay above a certain predetermined level.
• E) Employees prefer earnings-at-risk plans to all other performance-based pay plans

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Definitions:

Job-Order Costing

A costing method used to determine the cost of producing specific products or jobs, assigning direct materials, labor, and overhead costs to individual jobs based on actual expenses incurred.

Predetermined Overhead Rate

An estimated rate used for allocating fixed and variable overhead costs to products or services based on expected activity levels.

Automated Jointer

A machine tool used in woodworking for making flat surfaces along the lengths of boards, which operates automatically.

Capacity

The maximum level of output that a company can sustain to make a product or provide a service, given current resources and constraints.