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WorldatWork Regulatory Environments for Compensation Programs Sample Questions:

1. What happens to the marginal cost if revenue accelerates slower than variable costs but fixed costs remain the same?

A) It increases at the same rate as variable costs.
B) It becomes increasingly higher as revenues increase.
C) It remains the same.
D) It decreases because variable costs are increasing.

2. Which of the following best describes a form of base pay that is a fixed weekly, biweekly or monthly payment?

A) Salary
B) Hourly rate
C) Bonuses
D) Piece rate

3. Regarding cost analysis of compensation expense, which job is most likely to incur fixed costs for the company?

A) Production worker
B) IT contractor
C) HR Director
D) Account executive

4. What do profits, equity and debt all have in common?

A) They are all sources of capital.
B) They all incur the same costs to the business.
C) Nothing. Each of these is a different financial metric.
D) They are all reported on the balance sheet.

5. What best describes the primary purpose of budgeting?

A) Complying with local legislation and maintaining accurate records to prepare financial reports and tax documents
B) Limiting spending to a fixed percentage of organizational revenue
C) Making choices about spending based on expectations of performance
D) Increasing profitability of the business annually to maximize shareholder/owner value

Solutions: