Why Do Organizations Use Profit Sharing

question 77

Multiple Choice

Why do organizations use profit sharing?

• A) It has been established that profit sharing helps organizations perform better.
• B) It makes employees feel that they have control over the company's profits.
• C) It costs less when the organization is experiencing financial difficulties.
• D) It helps employees find a direct relation between their performance and gain.
• E) It motivates employees more than individual incentives.

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Definitions:

Marginal Cost

Marginal cost is the cost of producing one additional unit of a product or service.

Output

The total amount of goods or services produced by a person, machine, business, country, etc., during a given period.

Economic Profit

The net gain or loss after removing both easily identifiable and not readily apparent expenses from the overall turnover.

Price

The amount of money or compensation given in exchange for goods or services in a market.