Jennifer currently manages the polished chrome division of Skysong Broadway, a business that specializes in ceiling...

   

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Jennifer currently manages the polished chrome division of Skysong Broadway, a business that specializes in ceiling light fixtures. Its performance has been stable for the past few years. However, the crystal division has been losing market share, while the rustic iron and chrome divisions have been growing. For the most part, executives feel that these changes are a result of customer preferences and current trends versus the quality or prices of their products. While they expect preferences to return to the crystal product line in the next five years, a short-term decision must be made now. Budgeted financial information for Skysong Broadway's upcoming fiscal year is presented below for each division. Sales Variable costs Contribution margin Fixed costs Operating income Chrome Crystal Iron $1,211.000 $432,000 $756,000 771,000 297,000 310,000 440,000 135,000 446,000 230.000 230,000 230,000 $210,000 $(95,000) $216,000 All fixed costs are currently assigned evenly to all divisions. If they drop crystal line they will save 90,000 in fixed cost. if Jennifer is set to earn a 5% bonus on the actual product lines operating income, how much is her bonus? Also, how much would her bonus be if crystal was dropped? Jennifer currently manages the polished chrome division of Skysong Broadway, a business that specializes in ceiling light fixtures. Its performance has been stable for the past few years. However, the crystal division has been losing market share, while the rustic iron and chrome divisions have been growing. For the most part, executives feel that these changes are a result of customer preferences and current trends versus the quality or prices of their products. While they expect preferences to return to the crystal product line in the next five years, a short-term decision must be made now. Budgeted financial information for Skysong Broadway's upcoming fiscal year is presented below for each division. Sales Variable costs Contribution margin Fixed costs Operating income Chrome Crystal Iron $1,211.000 $432,000 $756,000 771,000 297,000 310,000 440,000 135,000 446,000 230.000 230,000 230,000 $210,000 $(95,000) $216,000 All fixed costs are currently assigned evenly to all divisions. If they drop crystal line they will save 90,000 in fixed cost. if Jennifer is set to earn a 5% bonus on the actual product lines operating income, how much is her bonus? Also, how much would her bonus be if crystal was dropped?

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To calculate Jennifers bonus we need to determine the operating incom... View the full answer