Incentive Plans in Which Employees Receive Bonuses in Proportion to the Company's

question 62

Multiple Choice

Incentive plans in which employees receive bonuses in proportion to the company's profitability are called:

• A) profit-sharing plans.
• B) gain-sharing plans.
• C) bonus plans.
• D) optimization plans.

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Definitions:

Turnover

In business, turnover is the total amount of revenue generated by a company from the sale of goods or services, or it can refer to the rate at which employees leave a business and are replaced by new employees.

Minimum Required Rate

The lowest expected rate of return on an investment that makes it acceptable to an investor, considering risk and opportunity cost.

Residual Income

A measure of a company's profitability, calculated by subtracting the cost of capital from operating profits.

Minimum Required Rate

The lowest rate of return that an investment must yield to be considered acceptable.