When Considering Whether to Use Merit Pay Increases or Merit

question 97

Multiple Choice

When considering whether to use merit pay increases or merit lump sum bonuses, an organization should consider that:

• A) Bonuses generally cost the organization less because the payout doesn't permanently increase labor costs.
• B) Merit pay increases occur once and do not have a lasting impact on the employee's compensation.
• C) A lump sum bonus increases the employee's compensation each year.
• D) Bonuses must be given to everyone in order to be fair, and not just those who reach certain objectives.
• E) Merit pay increases look forward in order to provide an incentive for the employee to perform in the future.

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Definitions:

Operating Expenses

Costs associated with running a business that are not directly linked to the production of goods or services, including rent, utilities, and administrative salaries.

Capital Budgeting

Involves analyzing potential investments and expenditures to determine their economic viability and how they align with the company’s strategic goals.

Straight-Line Depreciation

An approach to spreading out the expense of a tangible resource evenly over its operational lifespan in annual increments.

Capital Budgeting

The process of planning and evaluating investments in long-term assets and projects, focusing on potential return on investment.