Which of the Following Is a Disadvantage of Using Incentive

question 56

Multiple Choice

Which of the following is a disadvantage of using incentive plans?

• A) The goals of an incentive plan may interfere with other management goals.
• B) The goals of incentive plans cannot be linked to particular outcomes or behaviors.
• C) Incentive plans cannot be used to promote group and organizational performance.
• D) Incentive plans cause dissatisfaction among the non-performing employees in the organization.
• E) Incentive plans are not very effective for jobs other than sales and service.

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Definitions:

Opportunity Costs

The cost of forgoing the next best alternative when making a decision.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered, and thus should not affect future business decisions.

Side-Effect Costs

Unintended expenses or losses that occur as a result of business decisions, not directly related to the project in question.

Incremental Overhead

Additional overhead costs that are incurred when an organization increases its production volume or undertakes new activities.