WorldatWork C1 : Regulatory Environments for Compensation Programs

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WorldatWork C1 Exam Syllabus Topics:

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

2. Which type of base pay is typically based on an individual employee's rate of production?

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

3. Regarding medical plans, what is the out-of-pocket maximum?

A) The most that the member will be liable for in relation to co-insurance
B) The limit the member will be required to pay at each doctor visit
C) The maximum the plan will pay if the member is covered by another insurance plan
D) The lifetime limit for benefits to any one employee

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

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

5. Your company has had a strong fiscal year with a 15% increase in net income over the prior fiscal year. Share prices are at an all time high. Working with Finance, you have arrived at a 2.5% merit increase budget for the next fiscal year, a smaller increase than the last fiscal year. Finance has indicated that some large capital expenditures will be needed next year, so the company needs to conserve resources. Additionally, Legal is in final negotiations on a lawsuit that may be very costly to the company. Word of the smaller increases has line management concerned that they will lose their best performers. Given all of these factors, what is your best course of action?

A) Gather the perspectives of all stakeholders, analyze their individual concerns and meet to determine whether a compromise solution is possible
B) Meet with Finance and make a case for a larger merit increase budget because the loss of key talent will cost more over the long term than the savings from the smaller merit increases
C) Implement the merit increase budget as is because the anticipated financial obligations have made it necessary
D) Recommend a reduction in force to eliminate poor performers, which will increase the merit budget by reducing headcount

Solutions: