Which of the Following Is a Disadvantage of the Individual

question 97

Multiple Choice

Which of the following is a disadvantage of the individual incentive system?

• A) The net result is typically less than optimal for the competing individual.
• B) Employees may primarily focus on what is best for them personally.
• C) This system can be used only for providing monetary incentives.
• D) This system does not include any form of bonus.

---

Definitions:

Contribution Margin Ratios

The ratio of contribution margin (sales minus variable costs) to sales revenue, indicating the percentage of sales revenue that exceeds variable costs.

Break-even Point

The production level at which total revenues equal total expenses, resulting in no profit or loss.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, reflecting a company’s fixed versus variable costs structure.

Contribution Margin Ratio

The proportion of sales revenue that remains after variable costs are subtracted, expressed as a percentage, indicating the contribution towards covering fixed costs and generating profit.