In developing compensation plans, the management accountant works to achieve fairness by making the plan:
A) Precise, comprehensive and directive.
B) Simple, clear and consistent.
C) Attractive.
D) Rewarding.
E) Selective.

Question

Quizplus · Accepted Answer

The best choice is "B," which highlights the need for simplicity, clarity, and consistency in developing compensation plans. Fairness requires that the compensation plan is easy to understand, contains clear criteria for employee performance, and is applied consistently to all employees. A precise, comprehensive, and directive compensation plan might be complex and difficult to understand, while an attractive or rewarding plan might be subjective and inadequate in addressing employee performance. A selective compensation plan may lead to discrimination and inequity.

In Developing Compensation Plans, the Management Accountant Works to Achieve