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 2 years 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
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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
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$94,800
Drye
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91,810
Poole
441,000
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An executive in a merchandising company receives an annual bonus
equal to 5% of net income. Historically, the company has calculated
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maintained 30,000 of units in inventory for the last ten years. The
executive is recommending the company reduce the number of units in
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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
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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
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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
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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...
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