The Logic Behind Gain-Sharing Plans Is That

question 1

Multiple Choice

The logic behind gain-sharing plans is that:

• A) reward systems such as pay for performance are practical only when performance can be easily and objectively measured.
• B) those who are making lower salaries get larger percentage increases,whereas those earning higher salaries get a flat raise.
• C) if everyone works to reduce cost and increase productivity,the organization will become more efficient and have more money to reward its personnel.
• D) individuals who do superior work can be given increases greater than the rest of their colleagues.

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Definitions:

Fair Value

An estimated market value of an asset or liability, based on the assumption of a transaction between willing parties in an arm's length transaction.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing factors such as reputation, brand, and customer relationships.

Entity Method

A consolidation approach where investments are recorded at the purchase cost, adjusted for the parent company's share in the subsidiary's post-acquisition profits or losses.

Gross Margin

A company's revenue minus its cost of goods sold, divided by revenue, expressed as a percentage, indicating the percentage of revenue that exceeds the cost of goods sold.