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How often is an employee profit share usually paid, and on what basis?
AOnce a year, based on annual company financial performance
BOnce a month, based on the hours the employee worked
COnce a week, based on the units the employee produced
DTwice a year, based on the length of the labor contract
Answer & Solution
Correct answer: A. Once a year, based on annual company financial performance
1. In a profit-sharing plan the employee receives a portion of the firm's profit.
2. Profit is measured on the company's annual financial performance.
3. Because the measure is annual, the share is paid once a year.
4. Hours worked and units produced drive wages and piece rates, not profit shares, so options B and C use the wrong basis.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 8 "Managing Human Resources and Labor Relations", section Types of Compensation or Pay_
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