Question

	2016	2017	2018
Compensation Expenses (Base & Variable Pay):	38.5	41.7	40.6
Pay-for-Performance Expenses:	7.5	10.3	9.9
Benefits Expenses:	18.3	19.9	19.3
Total Operating Expenses:	65.6	72.7	74.0
Total Revenue:	199.1	191.9	178.7
Total Compensation Expense Factor:	0.87	0.85	0.81
Pay-for-Performance Expense Factor:	0.11	0.14	0.13
Total Compensation Revenue Factor:	0.29	0.32	0.34
Pay-for-Performance Revenue Factor:	0.04	0.05	0.06

What trends did you notice? What implications do they have?

Answer 1

Compensation expenses (base and variable)

1 Compensation expenses includes recruiting cost,salaries ,payroll expenses ect .It is a part of operating cost

Base _ monetary benefit (in cash) to employees like wages and salaries

Variable_ It fluctuate according to output produced. Like piece work or hours worked or commission

2 pay for performance expenses

Paid more money for achieving a certain goal rather than being paid for just providing care or pay for quality not the quantity

3 Benefit expenses

Indirect means of compensating workers; employee receive these benefits above and beyond their wages.like incentives,retirement benefit etc

4 Total operating expenses

It is the expense incures inorder to keep it running .such as staff wages .It does not include CGS ,capital expenditure etc

5 Total revenue

The total receipts a seller can obtain from selling goods or services to buyers.

6 Total compensation expense factor

It shows the proportion of your organisation,s budget is dedicated to employee compensation

7 Pay for performance expense factor

It is a strategy where evaluation of individuals or organisational performance have significant influence on the amount of pay

Eg strong link between executives performance and company operating income, return on capital

8 Total compensation revenue factor

It compare the amount of money a company spend on paying it's employees to the amount of money it makes in net sales

9 pay for performance revenue factor

Analysis and improvement of sales marketing efforts using revenue as the key performance indicator

Sorry wrong answer

Correct answer

Trend percentages

2016.% .2017%. 2018%

Compensation exp. 100 108.3 105

Pay for performance100 137.3 132

Benefit exp . 100 108.7 105.4

Operating exp. 100 110.7 112.8

Total revenue. 100 96.3 89

Compensation exp

factor. 100 97.7 93

Performance

exp factor. 100. 127.2 118

Compensation

revenue factor. 100. 110.3 117.2

Performance

Revenue factor. 100. 125 . 150

The above figure shows trend percentages .Take 2016 as a base year and calculate percentages on 2017 and 2018

Present value/base value*100

All figures in 2017 compared to 2016 is increased except total revenue and total compensation exp

Compare to 2017 and 2018 all decreases except total expenses and pay for performance revenue factor and total compensation revenue factor.

Take necessary actions to receive revenue relating to expenses incurred.and change the compensation policies to adjust benefit cost ratio.