Worldatwork Exam CECP Topic 1 Question 74 Discussion

Actual exam question for Worldatwork's CECP exam

Question #: 74
Topic #: 1

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 Idella at Nov 14, 2024, 11:18 PM

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Freeman

22 hours ago

Haha, I hope they give out bonuses for the right answer. C is the way to go - got to love that increasing profit growth!

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Henriette

7 days ago

This is a tricky one, but I'm going with D. The fixed costs stay the same until the variable costs catch up. Gotta love those stable compensation numbers!

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Broderick

9 days ago

C definitely seems the most logical. With a higher percentage of fixed compensation, the costs won't scale up as quickly as the revenue. Time to celebrate with a raise!

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Nickole

12 days ago

That's an interesting perspective, Kristofer. I can see how that could make sense too.

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Johnetta

15 days ago

Hmm, I'm not so sure. I was thinking B might be the right answer since the compensation and revenue should increase at about the same rate.

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Chun

2 days ago

A) Compensation costs eventually stabilize and become a consistent percent of revenue.

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Kristofer

16 days ago

I disagree, I believe the answer is C) Compensation costs eventually decrease as a percent of revenue, increasing profit growth.

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Joye

17 days ago

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

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Kenneth

3 days ago

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

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Nickole

20 days ago

I think the answer is A) Compensation costs eventually stabilize and become a consistent percent of revenue.

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