MCQ SET 3

1. Direct compensation includes which of the following:

Flexible benefits
Long-term incentive pay
Workers Compensation
Unpaid leave

2. Indirect compensation is represented by which of the following:

Social Security benefits
Short-term incentive pay
Differential pay
Merit pay
3. An audit and review of the services and costs billed by health-care providers is known as:
Procedural review
Practice analysis
Utilization review
Operational control
4. Person-based pay systems:
Pay higher performers more aggressively
Pay employees with long service more
Will not work when large numbers of professionals are employed
Pay employees for what they are capable of doing rather than the tasks they currently perform
5. Executives typically receive:
All of their direct compensation in incentives
Fewer perquisites than other employees
A higher percentage of their direct compensation in base salary than do other employees
A wider variety of compensation programs than do other employees
6. Which of the following employees must be paid overtime?
A janitor who worked 30 hours during the workweek and was also paid for 12 hours of vacation time
A vice president in charge of operations who worked 50 hours last week
A nonexempt employee who put in 45 hours last week
A dock worker who worked 40 hours, including 10 hours on Christmas
7. Which is an example of a health-related service that would be under the area of employee assistance programs?
Smoking cessation
On-the-job accident protection
Family and marital counseling
High blood pressure control
8. A compensation program should address which of the following objectives?
legal compliance with all appropriate laws and regulations
cost effectiveness for the organization
internal, external, and individual equity for employees
all of the above

MCQ SET 3
9. An employee who holds a non-exempt position under the Fair Labor Standards Act:
exercises discretionary authority for independent action
uses the percentage of his or her time performing routine, manual, or clerical work
earns an annual income in excess of $100,000
none of the above
10. One strategic business reason for offering a comprehensive benefits package to employees is:
to help attract and retain employees
to beat out the competition
to decrease employer operating costs
to offer cafeteria-style health care plans to employees
11. The Davis-Bacon Act of 1931:
requires company with federal supply or service contracts exceeding $10,000 to pay a prevailing wage
deals only with firms engaged in federal construction projects valued in excess of $2,000 and requires that the
prevailing wage rate be paid
addresses wage discrimination on the bases of sex
establishes overtime pay requirements
12. Which of the following is not one of the three main factors of the Hay system?
experience
know-how
problem solving
accountability
13. Which of the following is a legally mandated benefit?
social security
unemployment compensation
workers compensation
all of the above
14. What provides counseling and other help to employees having emotional, physical and other personal problems?
employee assistance programs
Drug Free Workplace Act
OSHA
wellness programs
15. Which of the following acts deals directly with discrimination in compensation?
Comparable worth
Equal Pay Act
Davis-Bacon Act
Fair Labor Standards Act
16. Which of the following is a funding feature of a health plan?
HMO coverage
PPO coverage
self-insurance
office visits
17. Total benefits cost (TBC):

MCQ SET 3
is a ratio of benefit cost per employee to average number of employees
is exclusive of miscellaneous items such as education
includes staff time, overhead, processing costs
is not usually calculated because it varies so much
18. Similarity in pay for jobs requiring comparable level of knowledge, skill, and ability, even where actual job duties
differ significantly is the:
Equal Pay
Pay Equity
Paycheck Fairness Act
None of the above
19. An incumbent who is paid below the range set for the job:
red-circled employee
green-circled employee
blue-circled employee
None of the above
20. Variable pay is also know as:
incentives
group pay
performance pay
B and C
21. A security benefit voluntarily offered by employers to employees who lose their job:
COBRA
Severance pay
Unemployment compensation
Supplemental Pay
22. Which of the following categories is not an example of an exempt classification?
Executive
Sales
Professional
Technical
23. The Equal Pay Act for equal work of same skills, effort, and responsibilities. Which of the following is not an
exemption of this act?
Seniority
Performance
Geographic location
Overtime
24. Which of the following is an example of payment that is consistent from period to period despite the number of
hours worked
Wage
Salary
Reward
Incentive

MCQ SET 3
25. Providing equal pay for jobs of equal nature based on job evaluation ensures _______ in compensation
administration.
external equity
internal equity
neutrality
None of the above
26. Payment of cash rewards for the work extracted from the employee is normally called
direct compensation
indirect compensation
non-monetary compensation
None of the above
27. Which of the following is the fixed component in compensation packages?
Profit-sharing
Base salary
Gain-sharing
Equity stock options
28. Insurance schemes, retirement benefits and leave travel concession are examples of
indirect monetary compensation
direct monetary compensation
non-monetary compensation
None of the above
29. Ensuring a fair balance between an employees contributions to the job and the rewards received in return from
that job is the essence of
equity theory
expectancy theory
agency theory
contingency theory
30. Which of the following theory states that the employees work hard in the job only when they are sure of positive
outcomes from that job?
Equity theory
Expectancy theory
Agency theory
Contingency theory
31. Managers never own complete responsibility for the all the decisions made by them since they are not the owners
of the business is the assumption of
equity theory
expectancy theory
agency theory
contingency theory
32. Wages which are usually positioned above the minimum wages but below the living wages are described as
real wages

MCQ SET 3
fair wages
minimum wages
living wages
33. _______ ensure that the employees get an income which is sufficient for meeting their present and future
necessities and contingencies.
Real wages
Minimum wages
Living wages
None of the above
34. Wages usually adjusted for the prevailing rate of inflation is called
real wages
fair wages
minimum wages
living wages
35. When there are several pay grades in a pay structure, it is called
traditional pay structure
broad-graded structure
job family structure
None of the above
36. Which of the following factors is not an external influencing factor in wages and salary administration?
Cost of living
Labour legislations
Labour market conditions
Ability to pay
37. Which of the following factors is not an external influencing factor in wages and salary administration?
Capacity of the organization to pay
Corporate policies and philosophy
Performance evaluation report
None of the above
38. Which of the following is not an objective of executive compensation plans?
Separating ownership interest and controlling interest
Enhancing employee motivation, involvement and commitment
Promoting managerial efficiency
Attracting and retaining the best executives
39. Provision for cars, parking lots and membership in country club are examples of
base salary of executives
short-term incentive plans
executive perks
None of the above

MCQ SET 3
40. Stock option and performance shares are examples of
base salary
short-term incentive plan
long-term incentive plan
All of the above
41. Performance-based annual bonuses are an example of
base salary
short-term incentive plan
long-term incentive plan
All of the above
Solution
25. external equity
26. direct compensation
27. Base salary
28. indirect monetary compensation
29. equity theory
30. Expectancy theory
31. agency theory
32. fair wages
33. Living wages
34. real wages
35. traditional pay structure
36. Ability to pay
37. None of the above
38. Separating ownership interest and controlling interest
39. executive perks
40. long-term incentive plan
41. short-term incentive plan
42. Compensation can be _____ benefits.
Monetary
Non-monetary
both a and b
None of the above
(Ans: c)
43. Wages represents _____ rates of pay.
Hourly
Daily
Weekly
Monthly
(Ans: a)

44._______ are also called payments by results.

MCQ SET 3
allowances
claims
incentives
fringe benefits
(Ans: c)
45. Incentives depends upon
productivity
sales
profits
All of the above
(Ans: d)
46. The following is paid only at the time of employees exit after serving more than five years
Perquisites
Claims
Gratuity
Allowances
(Ans: c)
47. The following is a perquisites.
Club membership
Provident fund
Medical allowance
Group insurance
(Ans: a)
48. A behaviour which has rewarding experience is likely to be repeated is postulated by
Reinforcement and expectancy theory
Equity theory
Agency theory
None of the above
(Ans: a)
49. A fair day work for fair day pay denotes a sense of _______ felt by employees.
Responsibility
Equity
Happiness
Respect
(Ans: b)
50. The remuneration system needs to meet the following type(s) of equity
Internal
External
Individual
All of the above
(Ans: d)
51. Which of the following factor influence(s) employee compensation?

MCQ SET 3
Labour market
Cost of living
Labour unions
All of the above
(Ans: d)
52. Match the following
Business strategy Compensation strategy
A. Invest to grow
B. Manage earnings protect markets
C. Harvest earnings reinvest elsewhere
The correct answer is

1. Stress on cost control

2. Stimulate entrepreneurialism
3. Reward management skills

A-1, B-2, C-3

A-2, B-1, C-3
A-2, B-3, C-1
A-3, B-1, C-2
(Ans: c)
53.Any compensation plan must be
Understandable, workable, acceptable
Reasonable, workable, acceptable
Understandable, feasible, acceptable
Understandable, workable, compensable
(Ans: a)
54. The following is not a part of remuneration model
Job description
Job evaluation
Job hierarchy
Job analysis
(Ans: d)
55. Elitist remuneration systems are prevalent among
Well established firms
Companies with mature products
Companies with limited competition
All of the above
(Ans: d)
56. In organized industrial establishments pay review takes place once in ____ years.
Three
Seven
Ten
Fifteen
(Ans: a)
57. Equal remuneration Act 1976, prohibits discrimination in matters relating to remuneration on the basis of

MCQ SET 3
Religion
Region
Sex
All of the above
(Ans: d)
58. The following is not a concept of wage
Daily wages
Minimum wages
Fair wages
Living wages
(Ans: a)
59. _______ can be fixed by comparison with an accepted standard wage
Minimum wages
Fair wages
Living wages
All of the above
(Ans: b)
60. A ______ must be fixed considering the general economic conditions of the country.
Minimum wages
Fair wages
Living wages
All of the above
(Ans: c)
61. In India, _____ wage is determined mainly for sweated industries
Minimum
Fair
Living
Standard
(Ans: a)
62. Basic compensations given to employees as salaries or wages are called
base pay
wages
variable pay
salaries
63. Payments made to employees for amount of time in which employee has worked are classified as
variable pay
salaries
base pay
wages

64. Compensation given with base pay linked to individual team or organizational performance is classified as

MCQ SET 3
variable pay
salaries
base pay
wages
65. Payments made to employees without taking hours for which they worked into consideration are called
base pay
wages
variable pay
salaries
66. Most common and usual form of direct compensation paid in organizations is
base pay and benefits
base and variable pay
variable pay and benefits
all of above