When evaluating a new compensation system, you notice that the compensation cost ratio increased, while total compensation or average earnings remained static. Which of the following is a likely explanation?
A) All employees have received some kind of raise.
B) Total costs and/or revenues have decreased.
C) Benefits have been removed from total compensation.
D) There is an error in the data; this situation is not possible.

Question

Quizplus · Accepted Answer

If the compensation cost ratio increased while total compensation or average earnings remained static, it is likely because total costs and/or revenues have decreased, making the compensation costs a larger proportion of the total.

When Evaluating a New Compensation System, You Notice That the Compensation