Chapter 10 – Compensation: Base Pay and Fringe Benefits
[QUESTION]
41. In order to qualify for the executive employee exemption, the employee must be
compensated on a salary basis at a rate not less than __________ per week.
A) $454
B) $545
C) $554
D) $544
E) $455
42. The __________ policy requires a pay structure that is based on an internal assessment of
job worth.
A) pay equity
B) supplement
C) compensation
D) minimum wage
E) labor
43. Under the __________ program, eligible individuals are covered by a comprehensive
program of retirement, survivor, disability, and health benefits.
A) employee welfare
B) social security
C) long-term capital accumulation
D) time-off plans
E) employee services
44. The __________ program provides for medical expenses and pay in cases where the
illness or injury is work related.
A) employee welfare
B) social security
C) workers’ compensation insurance
D) unemployment compensation insurance
E) employee services
Chapter 10 – Compensation: Base Pay and Fringe Benefits
[QUESTION]
45. Which of the following is not a component of compensation for international
assignments?
A) Base salary
B) Foreign service premiums
C) Allowances
D) Benefits
E) Pay for performance
46. What aspect of pay equity do wage and salary surveys help monitor?
A) Internal equity
B) Internal fairness
C) Individual equity
D) External utility
E) External equity
47. All of the following are benefit programs that are federally mandated with the exception of:
A) Social Security
B) Vacation
C) Workers compensation
D) Unemployment compensation
E) All of the above, there are no exceptions
48. Reasons why a company could see and increase in the cost of their unemployment
insurance include?
A) Aggressively fighting unjustified claims for unemployment
B) Establishing an effective performance management system
C) Ensure that terminations are based on employee misconduct
D) Making a decision to have a mass layoff of 58% of the workforce
E) All of the above
Chapter 10 – Compensation: Base Pay and Fringe Benefits
10-11
[QUESTION]
49. All of the following are forms of direct compensation except?
A) Base salary
B) Dental benefits
C) Vacation
D) 401K
E) Defined contribution pension
50. You have a business in south Florida. The minimum wage under the FLSA is $7.50/hour.
Florida has set its minimum wage at $8.00/hour. You are required to pay your secretary:
A) Base pay of $7.50 plus benefits
B) Market rate regardless of if it is lower than either minimum standard
C) Base pay of $8.00/hour and minimum of $7.50/hour in medical benefits
D) Premium pay of $7.50/hour
E) Base pay of $8.00/hour
Essay Questions
[QUESTION]
51. A computer consulting company wants to determine the market rate for jobs within the
organization. Discuss the steps the company should go through and the relevant factors that
should be considered.
Answer: The company should first determine key or benchmark jobs that are representative of
all the jobs under consideration. At this point it should be decided whether the organization
Chapter 10 – Compensation: Base Pay and Fringe Benefits
10-12
[QUESTION]
52. List all the criteria that must be met to qualify for the executive employee exemption.
Answer: In order to qualify for the executive employee exemption, all of the following tests
[QUESTION]
53. What is comparable worth? How is it different from equal pay as defined by the Equal
Pay Act?
Answer: The equal pay policy states that individuals performing the same job should be paid
[QUESTION]
54. Define and explain the differences between external and internal equity. What is a basic
technique used to ensure each?
Answer: When making an external equity comparison, employees compare the pay they
Chapter 10 – Compensation: Base Pay and Fringe Benefits
10-13
[QUESTION]
55. Describe how you would use job evaluation to create internal equity. What are the pros
and cons of using different job evaluation systems?
Answer: Job evaluation is the process of assessing the value of each job in relation to other
jobs in the organization. Traditional compensation programs use job evaluation to create
Chapter 10 – Compensation: Base Pay and Fringe Benefits
[QUESTION]
56. Explain the few ways in which reward systems can influence a company’s success (or
failure).
Answer: Reward systems can influence a company’s success (or failure) in three ways. (1)
Level: Medium
[QUESTION]
57. What are the objectives of an effective compensation system?
Answer: An effective compensation system has the following five objectives: (1) It enables an
[QUESTION]
58. List a few criteria’s that will help an organization choose the type and the depth of the
compensation analysis.
Chapter 10 – Compensation: Base Pay and Fringe Benefits
10-15
[QUESTION]
59. What are the different ways in which an organization structures its base salary program?
Answer: An organization can use a single rate structure in which all employees performing
[QUESTION]
60. Explain the demerits of the traditional approach to pay.
Answer: Many traditional job evaluation programs place great value on specialty knowledge