Cost Control
Chapter 18
Test Bank
True/False Questions
1. Indirect compensation includes free meals, life insurance, and discounts on accommodations. (T) * It is a contract between employee and employer * Aim to attract and keep loyal employees * Includes: paid vacation; health benefits; life insurance; free meals; free living accommodation; use of recreational facilities operated by the employer; discounts on accommodations; use of a company vehicle; reimbursement for outside classes; child care * Most common forms of indirect compensation: paid vacation
-two weeks per year
-4 percent of an employee’s current annual earnings
- roughly 6 percent of annual earnings
2. Deferred compensation includes travel expenses paid one month after the travel has taken place. (F)
Deferred compensation is compensation received by an employee after the conclusion of his or her period of employment, most commonly known as retirement
3. Labor control attempts to obtain maximum efficiency from all employees without compromising standards of labor performance. (T)
4. Increases in sales volume tend to improve labor productivity. (T) * As his efficiency increase, the cost of labor per unit produced actually decrease. * Increase in sales volume results in greater employee efficiency at lower labor cost per unit
5. The key to successful labor cost control is paying the lowest possible dollar wage.(F)
May use of part-time staff, outsourcing 6. The local minimum wage is an amount set by a group of local employers. (T)
7. Included in the term wages are sick pay and employees' meals. (F)
Wages: multiplying the employee’s hourly rate by the number of hours worked
(wages is direct compensation)
Sick pay and employee’s meal are indirect compensation
8. In an establishment with 200 employees, of whom 100 depart and are replaced each year, the labor turnover rate is 50.0%. (T)
9. From the perspective of labor cost control, it is cheaper to produce
Test Bank
True/False Questions
1. Indirect compensation includes free meals, life insurance, and discounts on accommodations. (T) * It is a contract between employee and employer * Aim to attract and keep loyal employees * Includes: paid vacation; health benefits; life insurance; free meals; free living accommodation; use of recreational facilities operated by the employer; discounts on accommodations; use of a company vehicle; reimbursement for outside classes; child care * Most common forms of indirect compensation: paid vacation
-two weeks per year
-4 percent of an employee’s current annual earnings
- roughly 6 percent of annual earnings
2. Deferred compensation includes travel expenses paid one month after the travel has taken place. (F)
Deferred compensation is compensation received by an employee after the conclusion of his or her period of employment, most commonly known as retirement
3. Labor control attempts to obtain maximum efficiency from all employees without compromising standards of labor performance. (T)
4. Increases in sales volume tend to improve labor productivity. (T) * As his efficiency increase, the cost of labor per unit produced actually decrease. * Increase in sales volume results in greater employee efficiency at lower labor cost per unit
5. The key to successful labor cost control is paying the lowest possible dollar wage.(F)
May use of part-time staff, outsourcing 6. The local minimum wage is an amount set by a group of local employers. (T)
7. Included in the term wages are sick pay and employees' meals. (F)
Wages: multiplying the employee’s hourly rate by the number of hours worked
(wages is direct compensation)
Sick pay and employee’s meal are indirect compensation
8. In an establishment with 200 employees, of whom 100 depart and are replaced each year, the labor turnover rate is 50.0%. (T)
9. From the perspective of labor cost control, it is cheaper to produce