A Compensating Differential Is

question 3

Multiple Choice

A compensating differential is

• A)a difference in pay due to nonmonetary characteristics of different jobs.
• B)a high wage paid by employers to entice workers to be more productive.
• C)the difference between the quantity of labor supplied and the quantity of labor demanded at the minimum wage.
• D)due only to difference in the productivity of workers with different skills.

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Definitions:

Machine-hours

An indicator of the duration for which equipment is utilized in the manufacturing process, commonly employed for distributing manufacturing overhead costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating the potential profitability of products.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding non-operating income and expenses.

Variable Expense Ratio

A measurement that indicates the proportion of variable expenses to sales, showing how costs change with sales volume.