Worldatwork Exam c8 Topic 3 Question 82 Discussion

Actual exam question for Worldatwork's c8 exam

Question #: 82
Topic #: 3

[All c8 Questions]

If a company has a higher percentage of employees with fixed compensation than variable compensation, what happens as revenues increase?

ACompensation costs eventually stabilize and become a consistent percent of revenue.

BCompensation costs and revenue increase at approximately the same rate.

CCompensation costs eventually decrease as a percent of revenue, increasing profit growth.

DCompensation costs remain the same as a percent of revenue until variable compensation costs exceed fixed compensation costs.

Show Suggested Answer

Suggested Answer: C

by Marcelle at Sep 17, 2024, 11:33 AM

Limited Time Offer

25%

Off

Get Premium c8 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Aja

9 months ago

The correct answer is definitely C. As a finance major, I can tell you that this is a classic concept in managerial accounting. Gotta love those fixed vs. variable costs!

upvoted 0 times

...

Dacia

9 months ago

C seems like the most logical answer here. The fixed compensation costs will become a smaller percentage of the total revenue as the company grows, so profit margins should improve.

upvoted 0 times

Lachelle

7 months ago

Exactly, it's all about managing costs as the company scales.

upvoted 0 times

...

Pamella

8 months ago

So, as revenue increases, profit margins should improve.

upvoted 0 times

...

Jospeh

8 months ago

That makes sense, as the company grows, fixed costs should become a smaller percentage of revenue.

upvoted 0 times

...

Gearldine

8 months ago

I agree, C does seem like the most logical answer.

upvoted 0 times

...

Hillary

9 months ago

I'm not sure, but I think the answer might be D.

upvoted 0 times

...

Magda

9 months ago

Haha, this question is a real brain-teaser! I'm going to go with C, but I wouldn't be surprised if the answer is actually 'all of the above' and the exam is just trying to trick us.

upvoted 0 times

Dan

8 months ago

I agree with both of you. It's definitely a tricky question, but I think the key is to consider how fixed and variable compensation costs would change as revenues increase.

upvoted 0 times

...

Anthony

8 months ago

I'm leaning towards A, because I believe that compensation costs should eventually stabilize and become a consistent percent of revenue as the company grows.

upvoted 0 times

...

Tarra

8 months ago

I think you might be onto something with C. It makes sense that as revenues increase, fixed compensation costs would eventually decrease as a percent of revenue.

upvoted 0 times

...

Virgina

9 months ago

I'm not sure about this one. I was thinking B might be correct, but now I'm leaning towards D after reading the options again.

upvoted 0 times

Helga

8 months ago

Let's consider all options before making a decision.

upvoted 0 times

...

Nickole

8 months ago

I'm not sure, but D seems like a possible outcome.

upvoted 0 times

...

Merilyn

8 months ago

I disagree, I believe C is the best option.

upvoted 0 times

...

Kaitlyn

9 months ago

I think A is the correct answer.

upvoted 0 times

...

Lisha

9 months ago

I disagree, I believe the answer is A.

upvoted 0 times

...

Gladys

9 months ago

I think the answer is C.

upvoted 0 times

...

Jerlene

9 months ago

I think the correct answer is C. As revenues increase, the fixed compensation costs will become a smaller percentage of the total revenue, leading to increased profit growth.

upvoted 0 times

Cristina

9 months ago

That makes sense, it would lead to increased profit growth.

upvoted 0 times

...

Eura

9 months ago

I agree, as revenues increase, fixed compensation costs decrease as a percent of revenue.

upvoted 0 times

...