Which of the Following Statements Best Describes Forms of Variable

question 56

Multiple Choice

Which of the following statements best describes forms of variable pay?

• A) Profit-sharing plans are also called piece-rate plans.
• B) Stock options are a category of job-sharing pay plans.
• C) Gain sharing is a motivational plan based on group productivity.
• D) Profit-sharing plans are based on the concept that intrinsic rewards are more motivating than extrinsic rewards.

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Definitions:

Residual Income

The net income an enterprise or project generates above its cost of capital or required rate of return.

Contribution Margin Ratio

A calculation that shows what percentage of sales revenue is available to cover the fixed costs of a business after variable costs have been paid.

Fixed Expenses

Costs that remain constant regardless of any change in a company's activity level, such as lease payments, insurance, and property taxes.

Sales

Represents the total income generated by a company from selling goods or services before any expenses are subtracted.