Which of the following statements is TRUE of a profit-sharing plan?
A) Under a profit-sharing plan, wage increases provided to the workers are based on the consumer price index.
B) Under a profit-sharing plan, the wages paid to workers are based on the number of hours they work over the required time.
C) Profit-sharing plans tend to increase waste and decrease efficiency.
D) Under a profit sharing plan, employees receive a lump-sum payment in addition to their regular wages based on sales levels.

Question

Quizplus · Accepted Answer

Under a profit-sharing plan, employees receive a lump-sum payment in addition to their regular wages based on sales levels. This lump-sum payment is calculated as a percentage of the company's profits, and it is distributed among employees based on their individual contributions to the company. The goal of a profit-sharing plan is to align the interests of employees and employers, as both parties benefit from increased profitability. However, profit-sharing plans may not necessarily increase efficiency or reduce waste.

Which of the Following Statements Is TRUE of a Profit-Sharing