Ben Johnson is the manager of the jewelry department of a large chain of department stores. The department store has succeeded on the basis of customer service and quality of merchandise. As a manager, Ben is compensated with a salary of $200,000 and a bonus based on his unit's operating income. The bonus pool is 10% of company-wide operating income. When the unit's return on invested assets exceeds the rate of return of the whole company, the unit manager is included in the bonus pool, which is divided evenly among the managers who qualify for the bonus. In the current period, 25 managers qualified for the bonus, including Ben. Stock price Operating income Assets Invested Customer service Quality of service Total revenue O $200,000 O$268,750 Jewelry Department O $266,000 O $282,000 $ 1,999,000 $ 22,500,000 4 $ 3,500,000 Whole Company $42 $ 16,500,000 $ 287,500,000 Required: Based on the above information, what is the amount of total compensation for Ben? $ 123,600,000

Ben Johnson is the manager of the jewelry department of a large chain of department stores. The department store has succeeded on the basis of customer service and quality of merchandise. As a manager, Ben is compensated with a salary of $200,000 and a bonus based on his unit's operating income. The bonus pool is 10% of company-wide operating income. When the unit's return on invested assets exceeds the rate of return of the whole company, the unit manager is included in the bonus pool, which is divided evenly among the managers who qualify for the bonus. In the current period, 25 managers qualified for the bonus, including Ben. Stock price Operating income Assets Invested Customer service Quality of service Total revenue O $200,000 O$268,750 Jewelry Department O $266,000 O $282,000 $ 1,999,000 $ 22,500,000 4 $ 3,500,000 Whole Company $42 $ 16,500,000 $ 287,500,000 Required: Based on the above information, what is the amount of total compensation for Ben? $ 123,600,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ben Johnson is the manager of the jewelry department of a large chain of department stores. Thedepartment store has succeeded on the basis of customer service and quality of merchandise. As amanager, Ben is compensated with a salary of $200,000 and a bonus based on his unit’s income.The bonus pool is 10% of companywide net income. When the unit’s return on invested assetsexceeds the rate of return of the whole company, the unit manager is included in the bonus pool;the bonus pool is divided evenly among the managers that qualify for the bonus. Selected information about the department store and Ben’s performance is as follows. Customer service is measuredon a 6-point scale, with 6 being the highest rating; quality of service is measured on a 10-pointscale, with 10 being the highest rating. In the current period, 25 managers qualified for the bonus,including Ben.JewelryDepartmentWholeCompanyStock price $ 42Net income $ 1,898,000 $ 16,500,000Assets invested $22,500,000…
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