C8 Online Practice Questions and Answers

Your company has had a strong fiscal year with a 15% increase in net income over the prior fiscal year. Share prices are at an all time high. Working with Finance, you have arrived at a 2.5% merit increase budget for the next fiscal year, a smaller increase than the last fiscal year. Finance has indicated that some large capital expenditures will be needed next year, so the company needs to conserve resources. Additionally, Legal is in final negotiations on a lawsuit that may be very costly to the company. Word of the smaller increases has line management concerned that they will lose their best performers. Given all of these factors, what is your best course of action?

A. Implement the merit increase budget as is because the anticipated financial obligations have made it necessary

B. Meet with Finance and make a case for a larger merit increase budget because the loss of key talent will cost more over the long term than the savings from the smaller merit increases

C. Gather the perspectives of all stakeholders, analyze their individual concerns and meet to determine whether a compromise solution is possible

D. Recommend a reduction in force to eliminate poor performers, which will increase the merit budget by reducing headcount

Information on the annual report shows results for what time period?

A. The calendar year from January 1 to December 31

B. The fiscal year, which matches the calendar year from January 1 to December 31

C. The fiscal year, which shows results from July 1 to June 30

D. The fiscal year, which may match the calendar year or may be a different 12-month period, depending on the company

The XYZ Company opened a new manufacturing facility with a capital investment of 10,000,000. The cost to obtain the capital was 8%. In its first year of operations, the facility's net operating profit after taxes was 10,500,000. What was the economic value added (EVA) using the EVA formula?

A. 500,000

B. 840,000

C. 8,000,000

D. 9,700,000

To ensure appropriate funding levels, the compensation professional must generally do which of the following?

A. Possess a high level of education and competency in accounting principles

B. Determine which programs are crucial to the enterprise and which programs are expendable

C. Partner with multiple departments and external consultants and vendors

D. Demonstrate broad understanding of principles of financial management and business expertise

What is the top line or starting point of an organization's income?

A. Gross profit

B. Revenue

C. Net income

D. Operating profit

What choices are most commonly faced by companies in the decline phase of the business lifecycle?

A. Whether to improve productivity, obtain new operating capital or generate new sales growth

B. Whether to reinvest in existing products, create new products or maximize profits with current products as long as possible

C. Whether to acquire competitors with greater market share or merge with more successful companies

D. Whether to increase sales, maximize distribution capacity or increase efficiency to meet growing demand

Regarding presentations to executives, which of the following is most accurate?

A. Keep them brief

B. Use multiple media

C. Include all details related to the issue

D. Leave backup data out of the presentation so there is time to develop an effective response to unexpected questions

The Delta Company has experienced increased turnover in the past two years. Data from exit interviews indicate that most of those leaving did so for better opportunities and higher compensation. If Delta pays at the highest percentile of the market for their peer group, what data analysis should they do?

A. Additional quantitative analysis to determine whether pay rates are truly competitive or existing data are unreliable

B. Qualitative data collection to talk to key stakeholders and employees and determine whether the exit interviews accurately reflect their concerns

C. Qualitative data collection in the form of an employee survey with questions about employee satisfaction with pay levels

D. No additional data analysis is needed. Delta should increase pay rates based on the existing data to decrease turnover.

Which of the following best describes the guiding principles and/or beliefs shared by stakeholders in an organization?

A. Mission

B. Vision

C. Values

D. Strategy

What question is answered by the organization's mission statement?

A. What direction will we take?

B. How do we work?

C. Why are we in business?

D. How will we achieve our objectives?

What statement is most accurate regarding compensation communications with employees at varying levels?

A. They tend to be fairly consistent because the elements of pay may differ, but the concerns are universal.

B. They generally require a greater degree of detail for lower level employees who have less of an understanding of pay plan design.

C. They usually require more detail for senior employees regarding plan details and performance and the needs from one employee group to another can vary greatly.

D. They should be kept to a minimum for employees at all levels to maximize efficiency and efforts can be focused only on those who have questions.

What best describes a use of strategic analysis?

A. Pricing your products appropriately

B. Understanding your business and its competitive strengths and weaknesses

C. Forecasting profit, growth and investment performance to develop realistic budgets

D. Evaluating prior year performance for the narrative portion of annual financial reports

What happens to the marginal cost if revenue accelerates slower than variable costs but fixed costs remain the same?

A. It remains the same.

B. It decreases because variable costs are increasing.

C. It increases at the same rate as variable costs.

D. It becomes increasingly higher as revenues increase.

Regarding fixed and variable costs, what are Finance's primary concerns?

A. Fixed costs must be kept to a minimum, but variable costs can fluctuate since they tend to correlate with revenue.

B. Variable costs often have a heavier focus than fixed costs, which applies to all areas, including compensation.

C. Fixed costs and variable costs are equally important and both should be kept to a minimum.

D. Fixed costs are not a concern because they cannot be changed, so the focus is primarily on variable costs.

Administering budgets is an example of what key competency for compensation professionals?

A. Financial Management

B. HR Management

C. Resource Management

D. Policy Management