Employee Benefits and Extending the Pay System
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Employee Benefits and Extending the Pay System
1. A useful tool for determining the true worth of an entire executive compensation package is
A. a Gantt chart.
B. the graphical evaluation and review technique (GERT).
C. the program evaluation and review technique (PERT).
D. a tally sheet.
2. Annual bonuses often play a major role in executive compensation and are primarily designed to
A. motivate better short-term performance.
B. decrease pay differentials between supervisors and subordinates.
C. reduce overtime pay.
D. increase employee turnover.
3. Increased global competition has caused unions to
A. demand higher base wages than their international counterparts.
B. become more receptive to alternate reward systems that link pay to performance.
C. demand increases in product prices to cover for increased wage costs.
D. accept less variable pay in exchange for higher base pay.
4. For an employee to gain lifetime coverage under Social Security, he or she must have worked for
_______ quarters during which they were covered by the Act.
A. 20
B. 10
C. 30
D. 40
5. A survey shows that the majority of employers are responding to increased benefit costs by
A. laying off employees.
B. requiring employees to pay higher deductibles and copays.
C. relying on the Patient Protection and Affordable Care Act.
D. dropping health care plans.
6. Scott, the CEO of JettEast Corp., feels that he’s underpaid, so he hires a compensation consultant to
survey actual competitors of the company. According to agency theory, if JettEast performs poorly, Scott’s
salary will most likely
A. be withheld and paid at a later date as the company is doing poorly.
B. be increased in order to retain him.
C. remain the same as CEO salary is based only on performance.
D. remain the same as the company is doing poorly.
7. In the negotiation stage of a multiyear wage contract, Idris, the manager of Stackhouse Corp., specifies
that changes will be made to the wage based on the changes in the consumer price index and mentions the
effective dates of adjustment. Which of the following types of clauses has Idris introduced in the contract?
A. Escalator clause
B. Reopener clause
C. Halo clause
D. Spillover clause
8. One of the most preferred benefits is
A. shorter working hours.
B. profit sharing.
C. early retirement.
D. stock plans.
9. A benefit plan that allocates a set dollar amount to employees and allows them to select benefits is called
a _______ plan.
A. no-deductible
B. flexible benefit
C. flat dollar benefit
D. select choice
10. If improved account retention became a major focus of attention, the performance measure stressed
would be
A. a customer satisfaction index.
B. percentage account erosion.
C. a volume measure.
D. gross margin on sales or price per unit.
11. The phenomenon where the nonunion management continues to enjoy the freedom from union
“interference” in decision making, and the workers receive the rewards already obtained by their unionized
counterparts, is known as
A. the spillover effect.
B. experience differential.
C. the equal mirror effect.
D. automatic progression.
12. Eighteen-year-old Adrian has been working at Almanza Corp. for more than a year. If Almanza offers
full vesting after one year, which of the following statements is true?
A. Adrian isn’t eligible for pension because he’s not older than 21.
B. Adrian isn’t eligible for a pension if he quits of his own volition.
C. Adrian is eligible for full pension as he’s worked for more than a year at Almanza.
D. Adrian is eligible for 20 percent of his pension if he has dependents.
13. Rubye Corp. sells a smart wristband that, apart from monitoring heart rate and blood pressure, also
reminds users to stand and walk every half hour. As part of its promotional efforts, a celebrity starts
wearing the wristband, thereby increasing its popularity and ease of sale. Which of the following is most
likely to happen?
A. Rubye will hire only contingent workers.
B. Rubye is likely to increase base salaries and decrease incentives.
C. Rubye will set lower sales targets for its employees.
D. Rubye is likely to lower its executive compensation in order to increase stock price.
14. In which of the following situations would the engineering jobs be most likely treated as a special
compensation group?
A. Mechanical engineers employed by a large city corporation
B. Computer engineers employed at a software firm
C. Biomolecular engineers employed at a farm equipment manufacturer
D. Acoustical engineers at a waste disposal company
15. Hildebrand Corp. is a pharmaceuticals company. One of its employees reports that he had an on-thejob injury caused by a slippery factory floor that broke his back. When Hildebrand initiates its claims
processing, it should first
A. determine if the employee is eligible for any benefit.
B. determine whether the accident happened.
C. contact the insurance companies to enquire about the possibility of a joint payment.
D. calculate the payment required to be paid to the employee.
16. _______ relieve an employer’s liability when a pre-employment injury combines with a work-related
injury to produce a disability greater than that caused by the latter alone.
A. Pre-employment funds
B. Insolvency funds
C. Second-injury funds
D. Collateral funds
17. The CEO of HammerCom Inc., Vincent, negotiates a new union contract with the union leader. If
Vincent wants to reduce expenses and keep the union happy, which of the following suggestions is most
likely to be helpful?
A. Introduce a gain-sharing plan that substitutes wages.
B. Introduce merit increases based on individual-based performance.
C. Provide lump-sum awards in exchange for merit pay increases.
D. Provide a 20 percent increase to base wages.
End of exam
18. The majority of defined benefit plans calculate average earnings during the last _______ years of
service for a prospective retiree.
A. 3 to 5
B. 6 to 8
C. 2 to 4
D. 7 to 9
19. Which of the following is a benefit under Social Security?
A. Lump-sum death payments
B. Overtime pay
C. Job security
D. Work/life balance
20. The rising costs of Social Security have been covered by
A. welfare grants and annual supplements from Congress.
B. increases in the maximum earnings base and the rate at which that base is taxed.
C. progressive reduction in the coverage.
D. reduction in Social Security benefits by providing market-driven options.
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