Question

S.K. Ltd. follows __________ financial compensation method to compensate its salespeople because it provides a sense of security to them as their income does not fluctuate with the sales volume.

• A. Straight Salary
• B. Straight Commission
• C. Performance Bonus
• D. Combination Plan

Hint:

Income that does not move with sales volume must be a fixed payment. Which method pays a fixed amount?

Answer 1

The Correct Option is A

Step 1: Find the key clue in the question:
The firm pays in a way that gives a sense of security because the income does not change with sales volume.
So the pay must be fixed, not linked to sales.

Step 2: Recall the methods of financial compensation:
Straight salary pays a fixed amount at regular intervals, whatever the sales are.
Straight commission pays only a share of the sales made.
Performance bonus is an extra amount paid for good results.
Combination plan mixes a fixed salary with a commission or bonus.

Step 3: Match the clue:
Only straight salary gives income that does not fluctuate with sales. The salesperson knows what he or she will earn each month. This gives security.

Step 4: Why the other options are wrong:
Straight commission: income rises and falls with sales, so there is no security.
Performance bonus: it depends on results, so it varies.
Combination plan: the commission or bonus part varies with sales.

Final Answer:
S.K. Ltd. follows the straight salary method, which is option (A).