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company compensates its sales manager in such a way that the sales manager honestly provides a sales target (forecast). The company’s compensation method is:      C   =     j T   +  k (A – T),  (if  A ≥ T)                j T   –  m (T – A),  (if  A < T)    where, C  =  compensation;  A = actual sales by sales manager;  T = sales target provided by sales manager   . In the above compensation method  the coefficient "j"   represents:     A. the advantage of exceeding the target.     B. the benefit of honestly setting  the target.   C. the penalty of not meeting the target.   D. the penalty of not setting the target honestly

company compensates its sales manager in such a way that the sales manager honestly provides a sales target (forecast). The company’s compensation method is:      C   =     j T   +  k (A – T),  (if  A ≥ T)                j T   –  m (T – A),  (if  A < T)    where, C  =  compensation;  A = actual sales by sales manager;  T = sales target provided by sales manager   . In the above compensation method  the coefficient "j"   represents:     A. the advantage of exceeding the target.     B. the benefit of honestly setting  the target.   C. the penalty of not meeting the target.   D. the penalty of not setting the target honestly

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 36

  1. A company compensates its sales manager in such a way that the sales manager honestly provides a sales target (forecast). The company’s compensation method is: 

     

      C   =     j T   +  k (A – T),  (if  A ≥ T)

                   j T   –  m (T – A),  (if  A < T) 

     

    where, C  =  compensation;  A = actual sales by sales manager;  T = sales target provided by sales manager

     

    .

    In the above compensation method  the coefficient "j"   represents:

     

      A.

    the advantage of exceeding the target.  
      B.

    the benefit of honestly setting  the target.
      C.

    the penalty of not meeting the target.
      D.

    the penalty of not setting the target honestly.
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