A Major Disadvantage of Commission Plans Is

question 6

Multiple Choice

A major disadvantage of commission plans is:

• A)the use of draws in conjunction with commissions.
• B)the weak linkage of performance to reward.
• C)the inability to combine salary with commission.
• D)the effects of uncontrollable factors on sales.

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Definitions:

Conversion Costs

Costs incurred in the process of converting raw materials into finished goods, primarily comprising direct labor and manufacturing overhead.

Equivalent Units

A concept used in cost accounting to express the amount of materials, labor, or overhead costs in terms of fully completed units of production during a specific time period.

First-In, First-Out

An inventory valuation method where the first items placed in inventory are the first sold.

Direct Materials

Direct materials are raw materials that are directly used in the manufacturing of a product and are easily traceable to the product being manufactured.