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WorldatWork Regulatory Environments for Compensation Programs Sample Questions:

1. Which of the following benefits are usually offered at the discretion of the employer?

A) Social security programs
B) Unemployment insurance
C) Disability (occupational)
D) Retirement plans

2. How are the compensation communication needs of managers different from those of individual employees?

A) They are also responsible for merit increases, incentives and hiring so they have greater information needs.
B) They tend to have more influence, so it is important to resolve any concerns they have quickly and efficiently.
C) They have more duties and responsibilities and are less likely to have the time to discuss compensation issues.
D) They aren't. Managers are concerned about their compensation also.

3. Regarding fixed and variable costs, what tends to happen as revenue increases?

A) Variable costs increase and consume a higher percent of revenue
B) Variable costs decrease
C) Fixed costs decrease
D) Fixed costs remain the same and consume a lower percent of revenue

4. Why are lump-sum increases generally used?

A) To reward employees under short-term incentive plans
B) To elevate employees who are below the midpoint in the range
C) To make up for benefits not provided by the organization
D) To control annual fixed costs from base pay adjustments

5. The XYZ Company opened a new manufacturing facility with a capital investment of 10,000,000. The cost to obtain the capital was 8%. In its first year of operations, the facility's net operating profit after taxes was
10,500,000. What was the economic value added (EVA) using the EVA formula?

A) 500,000
B) 9,700,000
C) 840,000
D) 8,000,000

Solutions: