Business - Multiple Choice
In the following series of values (related to job tenure), what is the mode? Years: 2, 15, 6, 3, 6, 12, 8, 6, 2, 4. A) 6 years B) 6.4 years C) 6.5 years D) 7.9 years
A) 6 years The mode is the number that appears with greatest frequency in a series. In this example, that number is 6 years, which appears 3 times.
How would an organization's use of zero-based budgeting affect the HR budget? A) All expenditures must be justified, and HR must compete with other departments for funding. B) The function's budget would see no growth in the upcoming period. C) New projects must be postponed until the current projects are completed. D) Balances for continuing projects from the previous period are carried over.
A) All expenditures must be justified, and HR must compete with other departments for funding. In an organization using zero-based budgeting, each function, including HR, begins with zero funds & must justify the strategic importance of each item in its budget. Funds are not carried over. Budgets are not necessarily frozen /decreased but could increase, especially if new projects are deemed strategically important.
A new head of HR would like to introduce a program to benefit employees who have added a new family member (newborns, adoptees or foster children, or older family members). It would allow greater flexibility in scheduling for the two years following the change in family status. HR staff include a question on the annual employee survey to estimate interest & use. They report back to the head of HR that survey responses do not indicate more than 2% interest in participation in the program. How should the head of HR respond? A) Ask for more information about the survey participation rates. B) Accept the data, but hire an outside firm to conduct focus groups. C) Thank the staff, but implement the program based on its ethical merits. D) Praise the staff for basing their recommendation on actual data.
A) Ask for more information about the survey participation rates. The usefulness of the survey data could depend on the representativeness of the employees who traditionally respond to the survey. Is the participation representative of all age groups & positions? Disregarding the staff recommendation, even if the action is well-meaning, could damage trust & engagement in the HR function. This would include hiring an outside expert, which shows doubt of the staff's expertise & judgment.
After recent activities such as downsizing, an organizational restructure, & the creation of a new business model, management believes the company is now set for renewal. As HR works with management to increase employee support of the changes, which critical issue should be the initial focus? A) Attitude & perceptions B) Job requirements & design C) Aptitude & ability D) Skills & knowledge
A) Attitude & perceptions HR professionals can contribute a more in-depth & detailed picture of how people will be affected by changes, how they are likely to react, & what they need to come through to the other side of the change. Organizational change is unsuccessful if employees have negative attitudes & perceptions toward the change. Prior to implementing any organizational development initiatives, HR must understand the level of resistance to the upcoming change & must plan for ways to deal with it.
What is a key benefit to HR leaders of a business intelligence system? A) Better evidence-based decisions. B) Less time spent analyzing performance C) Improved data security D) Expanded access to data throughout the HR function
A) Better evidence-based decisions. A business intelligence system is designed to provide leaders with more data & better means to analyze the data. This allows leaders to make better decisions that are based on actual data rather than on "instincts" or "best guesses." It does not necessarily improve data security, especially since it gathers more data from more points. Nor does it necessarily provide access to all staff levels. Leaders may spend more time analyzing but may make better decisions.
Executive leadership reveals to management that current cash flow is being adversely affected by delinquent & slow-paying accounts. HR is asked to collaborate with the sales manager to find a solution. How could HR best assist sales in this situation? A) Conduct a regression analysis of the sales incentive system. B) Arrange financial basics workshops for all sales personnel. C) Research & recommend local collection agencies. D) Arrange cross training between the sales & accounting functions.
A) Conduct a regression analysis of the sales incentive system. A regression analysis will help to determine whether a relationship exists between the slow-paying accounts & the behaviors driven by the sales incentive program & the strength of any such relationship.
Management has asked the HR director for help in identifying a benefit plan that manages increased costs without sacrificing employee morale. Which is the best action for the HR director to take? A) Conduct several representative focus groups. B) Hold individual interviews with employees with more than ten years' tenure. C) Purchase a benchmarking survey of comparable organizations. D) Survey all employees anonymously through a third-party survey.
A) Conduct several representative focus groups. The best advice would be to conduct several focus groups representative of employees in different areas & with different lengths of tenure. Groups could brainstorm a list of wants & preferences or react to ideas. This approach would also involve employees & contribute to employee engagement. Individual interviews with only 1 group would not provide adequate representation or engagement. An external survey also demonstrates lack of interest in employee feedback. Anonymity is not especially important here & does not merit the added expense.
A manufacturer experiences markedly lower capacity in one plant. The plant does not differ significantly in equipment, workforce size and skill, or processes. Which action should HR take to best assist the operations function in correcting this? A) Conducting a needs analysis in this location. B) Delivering quality training to plant supervisors. C) Sharing best practices from other locations. D) Reviewing parts supplier management practices.
A) Conducting a needs analysis in this location. Capacity is a problem in achieving an expected level of output. Since lowered capacity can result from many factors, likely causes should be identified before applying solutions such as quality programs, revised procedures, or training. HR can help operations by conducting a needs analysis to identify potential causes. The needs assessment will help provide a thorough understanding of what must be corrected.
Which is the best way for HR to ensure that a work/life balance focus group is successful in brainstorming potential ideas & solutions for improvement? A) Confirm that participants in the focus groups are representative of the workplace. B) Select a facilitator from within the organization to lead the focus group discussion. C) Have supervisors assign engaged employees as members of the focus group. D) Structure discussion topics & set specific outcomes for the focus group.
A) Confirm that participants in the focus groups are representative of the workplace. A focus group is intended to provide a microcosm of the population being studied. Participants must, therefore, adequately represent that population to ensure accurate, representative information.
For a specific job description, an industry wage survey shows a minimum salary of $50,000 & a maximum salary of $70,000. The head of HR calculates that the median salary for that position in her organization is $58,000. How does this organization compare with its industry competitors in this job description? A) It lags the competition. B) It leads the competition. C) This is not a helpful benchmark. D) The median salary should not be used for this purpose.
A) It lags the competition. The wage survey results can be divided into 4 quartiles: Quartile 1 = $50,000 to $55,000 Quartile 2 = $55,001 to $60,000 Quartile 3 = $60,001 to $65,000 Quartile 4 = $65,001 to $70,000 The organization is in the 2nd quartile, below the midpoint. It therefore lags the industry benchmark.
What is the best response an HR director might give to staff members seeking his support for a new policy on flexible time? A) Show me data on how this would benefit us. B) Are our competitors offering similar flexibility policies? C) Include the idea in the next employee survey. D) Create small pilot study to test the idea.
A) Show me data on how this would benefit us. The best response is one that demonstrates the importance of making decisions based on hard facts—in this case, the potential financial & nonfinancial benefits to the organization. Copying competitors' actions without evidence of potential value would not be a good decision, & basing the decision on employee reactions would be insufficient. A pilot study might be a good idea if the staff demonstrates that the potential benefits merit the investment of resources.
How is the Delphi technique used to perform a judgmental forecast? A) The preselected group does not meet, & each person makes & submits an independent forecast. B) Preselected individuals meet & come to consensus through a controlled discussion process. C) Each preselected group member makes an independent forecast, & then the group meets to come to agreement. D) The preselected group meets 1 time for discussion; then each member makes an independent forecast.
A) The preselected group does not meet, & each person makes & submits an independent forecast. In the Delphi technique, members of the group create independent work & submit it to the leader anonymously. They do not meet in person, & submissions are not discussed with participants. All the other choices call for meeting in person.
During a benefit needs assessment, which analysis would help to determine if the use of a given benefit has increased/decreased over time &, if it has, how quickly or slowly the increase/decrease has occurred? A) Trend analysis B) Ratio analysis C) Regression analysis D) What-if analysis
A) Trend analysis A trend analysis examines data from different points of time to determine if a variance is an isolated event or is part of a longer trend.
An HR leader is proposing to senior management that HR be provided with the time & resources to conduct a full compensation structure analysis. The HR leader chooses 2 cases to show the effects of misaligned compensation. The compensation is well over market rates in 1 instance & well below market value in the other. (The rates are derived from a national compensation survey.) What does this proposal demonstrate? A) Commitment to data gathering & analysis B) Belief that decisions should be based on evidence C) Supporting an argument with insufficient & unrepresentative data D) Cherry-picking data that will support the leader's plan
B) Belief that decisions should be based on evidence The HR leader's approach shows a commitment to evidence-based decision making. This requires gathering & analyzing data, but the purpose is to make better business decisions. The cases are logically chosen, & the benchmark data comes from an unbiased source.
An organization promotes teamwork as a core value. Which would be the best way for an HR manager to model this value for the rest of the organization? A) Implementing a mentoring program. B) Establishing cross-functional brainstorming groups. C) Encouraging subordinates to take leadership roles. D) Scheduling workshops on teamwork.
B) Establishing cross-functional brainstorming groups. Brainstorming groups that are run effectively involve collaboration, respect, & support, which are essential to teamwork. Workshops can promote the concept but cannot model it. Efforts aimed at improving leadership skills may not focus on the value of teamwork. Similarly, mentoring may focus on the individuals alone.
An HR consulting team wants to better understand the odds that a particular initiative can be implemented successfully. What tool is designed to support this analysis? A) Multi-criteria decision analysis B) Force-field analysis C) SWOT analysis D) Delphi technique
B) Force-field analysis Force-field analysis examines the factors that favor & oppose a particular change. The process can be used to score different possible approaches. A force-field analysis might be used to develop a multi-criteria decision analysis tool. A SWOT analysis identifies strengths, weaknesses, opportunities, and threats. The Delphi technique is an anonymized (remove parts for testing) approach to gathering information.
Which graphic analysis tool could best help an organization's intervention team lower accident rates on its factory floor? A) Cause-and-effect diagram of an accident. B) Pareto chart showing the types of accidents. C) Scattergram comparing rates of accidents and time of day. D) Process analysis of the product manufacture process.
B) Pareto chart showing the types of accidents. The Pareto chart applies the principle that 80% of effects come from 20% of causes in the form of a histogram. This distinguishes between the "vital few" categories that contribute most of the issues & the "trivial many" categories of infrequent occurrence, to support more focused quality improvement activities.
A new CEO of a food products company asks the VP of HR in a meeting, "On average, what does a food scientist make here?" The company is large, with operations in different locations with different market rates. Many of the operations were acquired, & their staffs have more tenure. How should the VP handle this question? A) Identify an industry average. This will serve the CEO's needs. B) Provide a weighted average that accounts for location & longevity. C) Provide the average signing salary for new scientists for the past year. D) Calculate a simple average of salaries for scientists at all levels & in all locations.
B) Provide a weighted average that accounts for location & longevity. The most accurate answer is a weighted average that takes into account the broad range of salaries in this job class due to the different factors.
Porter's "Five Forces" framework was designed to identify industries that were more likely to be profitable & provide a return on investment. Which of the five factors is influenced by the other four? A) Threat of entry B) Rivalry among competitors C) Threat of substitution D) Bargaining power of buyers
B) Rivalry among competitors The model is based on the premise that every industry faces similar competitive challenges. All of the forces identified by Porter have a potential to increase the intensity of competition in the industry: threat of entry, bargaining power of buyers, threat of substitution, & bargaining power of suppliers.
An HR function has recently acquired a business intelligence (BI) system with online analytical processing capabilities. What is 1 danger that the leader of the function should be alert to? A) More problematic relationship with IT support. B) Increased need for monitoring of software maintenance. C) Analytical projects with no strategic benefit. D) More time spent considering data from different angles.
C) Analytical projects with no strategic benefit. Because of its capabilities, BI may be used to create analyses that have little strategic benefit. They are analyses performed for the sake of analysis, cuz they are possible. All software must be maintained, especially for security. Additional time spent on analysis is not a bad thing if it is aligned with goals. There is no reason to assume that BI systems will be more taxing on IT support functions than other applications, once HR users are trained.
An organization has to increase its hiring without increasing HR head count. How could machine learning help? A) By analyzing historical data on successful hires. B) By making and managing appointments for candidate interviews. C) By reviewing applications to identify & contact promising candidates. D) By providing more accurate & timely progress reports on recruitment goals.
C) By reviewing applications to identify & contact promising candidates. Machine learning allows a computer system to think & perform like a human—in this case, to apply "rules" about what constitutes a likely candidate & then automate the contact process. This saves time when HR resources are limited. The other choices do not take advantage of machine learning, although some benefit from automating tasks.
Through a recent company-wide survey, a large number of employees expressed interest in using cross-divisional teams to address organizational challenges. Which analysis should the HR business partner use to win management support for a pilot program? A) Multi-criteria decision analysis B) Force-field analysis C) Cost-benefit analysis D) SWOT analysis
C) Cost-benefit analysis The best way to win support for the initiative is to demonstrate to management its potential value. This could include tangible factors such as a higher # of solutions that can be implemented more easily & with greater success. It could also include some intangibles, such as the impact of employee participation on workforce engagement.
Once key performance indicators (KPIs) have been determined & performance has been measured, what HRIS tool is best for presenting information? A) Flowchart B) Theory of constraints C) Dashboard indicators D) Gantt chart
C) Dashboard indicators Dashboard indicator is an advanced analytical tool that displays important HR metrics using interactive data visualizations. It helps the HR department to improve recruiting processes, optimize the workplace management as well as to enhance the overall employee performance.
A global business solutions technology company operates regional call centers. A quality survey was conducted in the call centers for the 1st time, using a headquarters-designed tool to observe & score caller performance. The business used an experienced vendor with trained observers. 1 region scored much lower. The low score will affect the performance bonus of the regional manager, & the manager is claiming that the process was not fair. How should the head of HR respond? A) Repeat the survey in the region & in one other region chosen as a control group. B) Repeat the survey but with a different vendor in case the observers were biased. C) Hire a third-party expert to assess the validity of the tool used in the surveys. D) Explain the process to the manager & offer support to improve caller performance.
C) Hire a third-party expert to assess the validity of the tool used in the surveys. There is a possibility that the tool is not valid for all call centers, that it is measuring performance in a way that is appropriate in the headquarters country but not in the low-scoring region. For example, different cultures may be more or less direct in asking for information from customers. Repeating the project with the same invalid tool, even with a different vendor, may yield the same result.
Finance requests HR's input on human capital costs in the upcoming budget period. Which information has the largest impact on the budget? A) Number of employees estimated to be seeking retirement. B) Adopting a 401(k) automatic enrollment and 3% contribution. C) Increased staffing need estimates received from all divisions. D) Comparison of current and future health and welfare benefits.
C) Increased staffing need estimates received from all divisions. Increased staffing, incurring additional wages/salary and tax expense, will have the largest impact on the budget overall.
Due to changing customer needs, a company plans to cut 60% of its capacity & invest heavily in leading-edge technology. This will mean a major realignment of procedures, which will affect over 75% of employees. How can management ensure acceptance of these changes? A) Require that all managers agree with the company's value system. B) Provide the company's mission statement to all employees. C) Involve employees in creating the solutions needed. D) Ensure that the organization's core values & behaviors remain stable.
C) Involve employees in creating the solutions needed. Effective change recognizes that people are more likely to accept what they have participated in creating. The other answers impose solutions and are not participative.
If HR wants to minimize resistance to change among the employee population when implementing a new health insurance plan, which is a critical 1st step in the process? A) Isolate senior decision makers from the decision & any resulting animosity. B) Choose the most popular and well-known insurance company in the market. C) Involve employees in plan review & selection early in the evaluation process. D) Delegate presentation of plan details to an insurance company representative.
C) Involve employees in plan review & selection early in the evaluation process. In leading a change initiative, a manager must anticipate resistance & seek ways to manage it in advance. 1 of the most effective ways is to involve employees in problem solving. In this way, they understand the context more thoroughly, have a chance to voice opinions, and can affect & feel more invested in final outcomes. The manager-supplied context is helpful but perhaps too late. Removing oneself & senior decision makers from the stressful situation is a failure of leadership.
The VP of HR of an organization in a highly competitive industry has heard that the federal employee health & safety agency is considering increasing its employee safety regulations. What would be the best action for the VP to take? A) Take the opportunity at the next HR professional gathering to discuss the situation with other HR leaders. B) Urge HR staff & employees to send messages to their representatives protesting the need for expensive new regulations. C) Provide testimony to the agency stating preferences & the need to make new regulations apply to businesses of all sizes. D) Pay for a full-page newspaper advertisement that presents arguments against any new health & safety regulations.
C) Provide testimony to the agency stating preferences & the need to make new regulations apply to businesses of all sizes. It is the responsibility of HR leaders to advocate for the interests of the employer & its employees, so providing testimony can be a powerful action. In this case, cuz of the organization's competitive climate, the vice president of HR should emphasize the need for new regulations to be fair & not to favor some competitors over others. A discussion with peers is a good way to gather information & form ideas but not the strongest advocacy action. An advertisement arguing against a health & safety issue could imply the employer's lack of interest in employee health & safety. Urging staff & employees to represent the interests of the business is probably permissible, but its possible effect on employee engagement must be considered.
As part of a larger project on pay structure, an HR head directs a team to update job descriptions by observing & interviewing employees. The manager in charge of finalizing the job descriptions reports that he cannot finalize the descriptions because the data for any 1 individual position varies so much. What is the likely problem? A) The period of time allocated for observation was not long enough. B) The sample size chosen for observation was not large enough. C) Results are not reliable, because data was gathered in an inconsistent manner. D) Employees were not performing in the usual manner because they were being observed.
C) Results are not reliable, because data was gathered in an inconsistent manner. The observers were not using a tool, such as an observation or interview guide, that would ensure that they were collecting the same data in the same manner. In other words, the tool was unreliable, or the observers were not sufficiently trained in how to use the tool.
An HR manager decides to test the theory that a decline in the training of account managers is directly related to a decline in sales revenues. What technique will be most valuable in helping the HR manager visualize the correlation between training & revenues? A) Control chart B) Cause-and-effect diagram C) Scatter diagram D) Check sheet
C) Scatter diagram In a scatter diagram, the relationship between 2 variables (in this case, training & sales revenues) is analyzed. The control chart simply identifies how a process changes over time. The check sheet is a form used to collect data in real time. A cause-and-effect or fishbone diagram categorizes the potential causes of a problem in order to identify its root causes.
What action would best communicate to HR staff the importance HR leadership assigns to evidence-based decision making? A) The head of HR provides subscriptions to major business & organizational performance journals. B) Speakers from stakeholder groups & the community are invited in to present to the entire HR staff. C) Staff are assigned to research demographic data & report on its significance at meetings. D) Staff members are required to take at least 1 class on statistical principles every 3 years.
C) Staff are assigned to research demographic data & report on its significance at meetings. The action most in support of HR as a data advocate is assigning staff to gather and make use of demographic data. This data could affect the organization, its workforce, and HR programs in the future. This provides practical experience in data gathering and thoughtful analysis.
A high-potential member of the HR function wants to develop consultative skills. The HR director notes that the individual has a natural talent in analyzing problems and in establishing relationships with others. What other skill or knowledge could the individual develop to support the consultation role? A) Knowledge of legal requirements. B) Building trust with others. C) Understanding of the organization's business and environment. D) Technical expertise in business processes.
C) Understanding of the organization's business and environment. The ability to consult would be strengthened by an understanding of the organization's business, the way it creates value, and the internal and external forces that affect its success. The HR staff member appears to already possess relationship management and critical analysis skills. In-depth technical expertise in the organization's work processes is not necessary for consultation.
A VP & the HR director observe an employee focus group facilitated by HR staff. Both take notes, but their perceptions of employees' priorities & the strength of employee feelings on certain topics differ enough that both are reluctant to act on the group responses. What would be the best solution that the HR director could propose? A) Assemble another focus group, keeping conditions the same, & see if the disagreement persists. B) Rerun the focus group with an outside facilitator & a different group of employees. C) Set aside areas of disagreement & focus on areas where the VP & the director heard the same messages. D) Ask focus group participants to complete an anonymous survey that calls for numerical responses to specific questions.
D) Ask focus group participants to complete an anonymous survey that calls for numerical responses to specific questions. The best strategy would be to clarify participants' attitudes in a way that can be analyzed objectively. The responses in the focus group can be used to develop an effective survey to gather this focused data. Rerunning the focus group, even with a different group or an outside facilitator, may present the same issues. Agreeing to ignore areas of disagreement may mean agreeing to ignore critical areas of employee dissatisfaction.
How does the organization's value chain affect HR activity? A) HR efforts should be directed downstream, closer to the ultimate customers. B) It can be used as an argument against outsourcing HR services. C) HR's secondary position in the chain indicates the amount of approved budget. D) Critical activities can be targeted for assessment & improvement.
D) Critical activities can be targeted for assessment & improvement. By identifying key value-producing activities, the value chain helps leaders invest resources in the right activities. Secondary activities include some of the most vital & integrated parts of an organization. Value opportunities may lie in different places on the chain. Understanding where value is created can support outsourcing.
What is the best time to involve HR when a major internal workforce change is being introduced into an organization? A) Once the change has been implemented and is fully operational. B) After management's announcement and disclosure of the change. C) Only when specifically called upon by management to consult. D) During initial management discussions of the proposed change.
D) During initial management discussions of the proposed change. HR's knowledge of the organization, its people, and its processes, combined with its expertise in managing workforce capabilities and productivity, make it essential to structuring change. The other answers bring in HR after implementation or when asked and may lead to dissatisfaction and unsuccessful interventions.
After reviewing current practices, HR conducts a focus group of employees who are forced to work frequent overtime. The information leads to the implementation of changes in work practices. What is the best next step for HR? A) Pilot testing the initiative before implementation. B) Developing training for key stakeholders. C) Surveying employees. D) Evaluating the results of the initiative.
D) Evaluating the results of the initiative. The consulting model involves defining the problem, designing and implementing a solution, measuring effectiveness, and sustaining improvement. Training, surveys, and pilot testing should be done prior to the implementation of a new initiative. Therefore, evaluating the results of the new change initiative is the next step in the process.
What method allows individuals to access the online resources & data they need to process data & perform tasks? A) Self-service kiosk B) HRIS C) Online analytical processing D) HR portal
D) HR portal HR portals provide a point of entry to the organization's data and applications. The portal can be customized to provide access to defined areas. Employee self-service uses a portal to provide access to its users. A self-service kiosk is hardware that allows users to log in to HR portals to perform specific tasks. HRIS is a general term for an information system that stores HR data & includes HR applications.
An HR professional wants to represent the % of turnover for each of the last 5 years. Which graphic data analysis tool will be most effective for visualizing yearly turnover trends? A) Control chart B) Check sheet C) Pareto chart D) Histogram
D) Histogram A histogram visually summarizes key data using bars of varying heights. It works best for showing how change has occurred over time, & it makes it easy to see the data for each year & makes trends easy to spot. The Pareto chart combines a bar chart with a line graph where the bars are always found in a specific order—tallest to smallest.
To conduct an investigation, an HR professional must be skilled in which competencies? A) Being inquisitive, hearing, good interpersonal skills B) Able to think on his or her feet, good writer & presenter C) Intuition, strong written skills, verbal skills D) Interviewing skills, listening, & observing
D) Interviewing skills, listening, & observing The investigator must be able to formulate questions & conduct the interview, must listen for intent & what is being said & not said, & must be observant.
An international seed company is in a position to buy one of its competitors. Management has narrowed the options down to 3 possibilities. How can HR most strategically contribute to developing and evaluating a business case for this project? A) Review the corporate code of ethics and records of stakeholder satisfaction for each contender and recommend strategic options. B) Assign top HR executives to conduct thorough reviews of each culture and prepare presentations for diverse stakeholders. C) Estimate payroll and benefits for the entire workforce at each potential location and recommend the lowest-cost option. D) Review pivotal talent pools of employees at each organization whose skills are critical to the seed company's strategy.
D) Review pivotal talent pools of employees at each organization whose skills are critical to the seed company's strategy. HR can strategically contribute by determining the pivotal talent pools of employees needed in order for the combined organization to be successful.
Which likely workforce reactions should the VP of HR include in a presentation to executive leadership regarding an upcoming company reorganization? A) Initial increase in workforce turnover & then a revitalization with additional new hires. B) Increase in the use of paid time off & then a slight turnover of the workforce. C) Significant drop in productivity & then a slow return to standard productivity levels. D) Short-term decline in performance & then rapid growth to a new level of performance.
D) Short-term decline in performance & then rapid growth to a new level of performance. A well-managed organizational change leads to the "dreaded J curve," where there is typically a short-term decline in performance and then more rapid growth to a new level of performance.
Which of Porter's "Five Forces" is being applied in an organization that is compelled to offer a price reduction on services? A) Preference B) Entry C) Rivalry D) Substitution
D) Substitution Threat of substitution is based on how easy it is for a competitor to offer a similar product or service at a lower price, forcing the organization into competing on price.
Management tells HR that it should budget for an increase in the hiring rate in the upcoming year but that HR head count cannot increase. How will this affect the HR budget? A) The budget will be increased by the same percentage as the increase in the total workforce. B) Since the head count will remain the same, the HR budget will remain the same. C) The budget for fixed-cost items will decrease. D) The budget for variable cost items will increase.
D) The budget for variable cost items will increase. The budget cannot remain the same because variable costs associated with hiring tasks (costs affected by the volume of activity) will increase. As long as function responsibilities, facilities, & staffing levels remain the same, fixed costs should stay the same. The increase in costs will be driven by the number of new hires; it will not be an incremental increase in the budget.
