Two Managers Are Having a Discussion

question 128

Multiple Choice

Two managers are having a discussion.Bill says that the company's new incentive system will encourage high performance out of each employee because it clearly specifies what employees should do and the results that will lead to rewards.Beth disagrees,and says that Bill is ignoring the fact that employees will not be motivated if they don't feel that they are being treated fairly.In this discussion,Bill is making all of the following assumptions EXCEPT:

• A) employees can understand the new incentive system.
• B) employees are capable of achieving the results specified by the new incentive system.
• C) employees who exert a similar level of effort will receive similar rewards.
• D) employees will perceive that the rewards offered by the new incentive system are worth the effort required to achieve the results that lead to those rewards.
• E) employees believe that the things that the new incentive system calls for them to do are likely to have an effect on the outcomes that affect their rewards.

---

Definitions:

Support Department Allocation Rate

A rate used to allocate the costs of support departments to producing departments or directly to products based on relevant factors or usage measures.

Cost Drivers

Factors that cause the cost of an activity or product to change, such as production volume or raw material prices.

Support Department Cost

Expenses related to the functions that assist the direct operations or production departments of a business, such as human resources or maintenance.

Return on Investment

A metric for assessing the effectiveness or gains of an investment, determined by dividing the net earnings by the investment's expense.