If a Company Wants an Employee to Average About $14

question 36

Multiple Choice

If a company wants an employee to average about $14.00 per hour to produce 60 units per hour, plus it provides a base salary of $7.00 per hour, what should be the incentive rate per hour?

• A) $0.117
• B) $8.54
• C) $0.333
• D) $1.25

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Definitions:

Sales Volume

The total number of units sold or services provided by a business in a specified period.

Margin of Safety

The difference between actual or estimated sales and the sales level necessary to break even, indicating the risk level of not reaching break-even point.

Sales

The total amount of money generated from selling goods or services.

Degree of Operating Leverage

A ratio that measures the sensitivity of a company's operating income to a percentage change in revenue.