Worldatwork Exam c8 Topic 3 Question 82 Discussion

Actual exam question for Worldatwork's c8 exam

Question #: 82
Topic #: 3

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

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Aja

4 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!

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Dacia

4 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.

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Lachelle

2 months ago

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

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Pamella

2 months ago

So, as revenue increases, profit margins should improve.

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Jospeh

3 months ago

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

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Gearldine

3 months ago

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

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Hillary

4 months ago

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

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Magda

4 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.

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Dan

3 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.

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Anthony

3 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.

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Tarra

3 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.

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Virgina

4 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.

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Helga

3 months ago

Let's consider all options before making a decision.

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Nickole

3 months ago

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

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Merilyn

3 months ago

I disagree, I believe C is the best option.

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Kaitlyn

3 months ago

I think A is the correct answer.

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Lisha

4 months ago

I disagree, I believe the answer is A.

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Gladys

4 months ago

I think the answer is C.

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Jerlene

4 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.

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Cristina

4 months ago

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

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Eura

4 months ago

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

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