What Is the Current Trend for Pay for Performance

question 14

Multiple Choice

What is the current trend for pay for performance?

• A)It is declining in popularity.
• B)It is rising in popularity.
• C)It is rising in manufacturing but falling in services companies.
• D)It is staying about the same in popularity.
• E)It is uncertain about its status.

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to a change in sales, indicating the impact of fixed costs on profits.

Contribution Margin

The amount by which sales revenue exceeds variable costs, used to cover fixed costs and generate profit.

Break-Even Point

The point at which total costs equal total revenue, meaning the business does not make a profit or loss.

Degree of Operating Leverage

A financial metric that measures the sensitivity of a company's operating income to its sales, indicating the proportion of fixed to variable costs.