Question
In: Accounting
stintits Co. has an incentive compensation plan through which a division manager receives a bonus equal...
- stintits Co. has an incentive compensation plan through which a division manager receives a bonus equal to 10% of the division’s net income. Division income in 2019 before the bonus and income tax was $150,000. The tax rate is 21%.
Required:
- Express the bonus formula as one or more algebraic equation(s).
- Using these formulas, calculate the amount of the bonus.
- Prepare the adjusting entry to record the bonus compensation.
- Bonus arrangements take many forms. Suppose the bonus specifies that the bonus is 10% of the division’s income before tax, but after the bonus itself. Calculate the amount of the bonus.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Mary is the production manager of the potato chip division. She gets bonus equal to 10%...
Mary is the production manager of the potato chip division. She
gets bonus equal to 10% of her base salary if the division meets
its target profit. She realized that the preliminary profit figures
for the division is $10,000 below the target profit. She is
considering changing the estimated percentage completion with
respect to materials and conversion in ending work in process
inventory of the final processing department to increase the
profit. Does Mary want the percentage completion to be...
Mary is the production manager of the potato chip division. She gets bonus equal to 10%...
Mary is the production manager of the potato chip division. She
gets bonus equal to 10% of her base salary if the division meets
its target profit. She realized that the preliminary profit figures
for the division is $10,000 below the target profit. She is
considering changing the estimated percentage completion with
respect to materials and conversion in ending work in process
inventory of the final processing department to increase the
profit. Does Mary want the percentage completion to be...
Crane Corporation recently announced a bonus plan to reward the manager of its most profitable division....
Crane Corporation recently announced a bonus plan to reward the
manager of its most profitable division. The three divisional
managers are to decide which performance measure will be used to
evaluate profitability. Crane Corporation requires a 10% minimum
return on investment.
The following information is available for the year just
ended.
Division
Gross
Book Value
of Assets
Divisional
Operating
Income
Ashton
$800,000
$94,800
Drye
749,800
91,810
Poole
441,000
58,330
(a) Calculate return on investment.
(Round ROI to 2 decimal places,...
ETHICAL DILEMMA The management of the Auto Parts Division of the Santana Corporation receives a bonus...
ETHICAL DILEMMA
The management of the Auto Parts Division of the Santana
Corporation receives a bonus if the division's income achieves a
specific target. For 2013 the target will be achieved by a wide
margin. Mary Beth Williams, the controller of the division, has
been asked by Philip Stanton, the head of the division's management
team, to try to reduce this year's income and "bank" some of the
profits for future years. Mary Beth suggests that the division's
bad debt...
An executive in a merchandising company receives an annual bonus equal to 5% of net income....
An executive in a merchandising company receives an annual bonus
equal to 5% of net income. Historically, the company has calculated
cost of goods sold and ending inventory using LIFO and has
maintained 30,000 of units in inventory for the last ten years. The
executive is recommending the company reduce the number of units in
year-end inventory to 1,000. Over the ten-year period, the cost per
unit of inventory has increased from $60 per unit to $110 per
unit.
Respond...
An executive in a merchandising company receives an annual bonus equal to 5% of net income....
An executive in a merchandising company receives an annual bonus
equal to 5% of net income. Historically, the company has calculated
cost of goods sold and ending inventory using LIFO and has
maintained 30,000 of units in inventory for the last ten years. The
executive is recommending the company reduce the number of units in
year-end inventory to 1,000. Over the ten-year period, the cost per
unit of inventory has increased from $60 per unit to $110 per
unit.
Respond...
Philip Stanton, the executive manager of Thomson Pharmaceutical, receives a bonus if the company’s net income...
Philip Stanton, the executive manager of Thomson
Pharmaceutical, receives a bonus if the company’s net income in the
current year exceeds net income in the past year. By the end of
2021, it appears that net income for 2021 will easily exceed net
income for 2020. Philip has asked Mary Beth Williams, the company’s
controller, to try to reduce this year’s income and “bank” some of
the profits for future years. Mary Beth suggests that the company’s
bad debt expense...
The manager of Golden Ray Corporation receives a bonus if company profits exceed $1,000,000 this year....
The manager of Golden Ray Corporation receives a bonus if
company profits exceed $1,000,000 this year. During the final week
of the year, the manager changes an accounting policy that will
increase reported profits from $950,000 to $1,025,000, triggering
his bonus. The change in profits of $75,000 will reverse itself in
the next year, and the accounting change has no impact on Golden
Ray's cash flow. Discuss the above situation as it relates to both
an agency problem and efficient...
Steven is a CEO who had a non-qualified deferred compensation plan with Pimco Co. which of...
Steven is a CEO who had a non-qualified deferred compensation
plan with Pimco Co. which of the following is true?
Select one:
a. Pimco cannot discriminate in favor of Steven over rank and
file employees.
b. If Pimco doesn't have the funds to pay Steven, Steven will
become an unsecured creditor of Pimco.
c. Pimco is required to invest Steven's salary in investments
specified by Steven.
d. Pimco is required to annually fund the deferred compensation
requirement.
Write an essay: Mary is the production manager of the potato chip division. She gets bonus...
Write an essay:
Mary is the production manager of the potato chip division. She
gets bonus equal to 10% of her base salary if the division meets
its target profit. She realized that the preliminary profit figures
for the division is $10,000 below the target profit. She is
considering changing the estimated percentage completion with
respect to materials and conversion in ending work in process
inventory of the final processing department to increase the
profit. Does Mary want the percentage...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A fluid with constant viscosity and density flows in radial direction from R1 radius surface to...
- A department has an initial markup of 64%. Planned sales for April are $10,000 and $12,000...
- (Ch. 07) Consider the relation below: Car_Sales (Car_model (A), Equipment (B), Color (C), Price (D)), with...
- (1) Do we have a moral obligation to protect the environment? Why? What are two views...
- A rancher is considering the purchase of additional land to expand operations. He can operate an...
- If an asset costs $240,000 and is expected to have a $40,000 salvage value at the...
- What evidence supports the conclusion that GDF11 promotes the maintenance of adult neural stem cells?
ADVERTISEMENT