One Drawback to the Split-Award Approach Is That It Pays

question 26

Multiple Choice

One drawback to the split-award approach is that it pays too much to a marginal performer. What is one way to get around this problem?

• A) Lump-sum bonus method
• B) Individual award system
• C) Group incentive plan
• D) Individual bonus method
• E) Multiplier method

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Definitions:

FIFO Method

First In, First Out, an inventory valuation method that assumes the items purchased or produced first are sold first.

Equivalent Units

A concept used in cost accounting to convert partially completed goods into a number of fully completed units for accounting purposes.

Labor

The human effort, either physical or mental, that is used in the production of goods and services.

Overhead

Indirect costs related to manufacturing or business operations that do not directly tie to a specific product or activity, such as utilities, rent, and management salaries.