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 $270,000 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. Jewelry Department Stock price Operating income Assets invested Whole Company $ 45 $ 17,200,000 $ 288,200,000 6. $ 1,968,000 $ 23,200,000 Customer service Quality of service Total revenue $ 3,570,000 $ 124,300,000 Required: Based on the above information, what is the amount of total compensation for Ben?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 $270,000 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.
Jewelry
Department
Whole Company
$ 45
$ 17,200,000
$ 288,200,000
Stock price
Operating income
Assets invested
$ 1,968,000
$ 23,200,000
Customer service
Quality of service
Total revenue
$ 3,570,000
$ 124,300,000
Required:
Based on the above information, what is the amount of total compensation for Ben?
$270,000
$341,550
$338,800
$350,800
Transcribed Image Text: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 $270,000 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. Jewelry Department Whole Company $ 45 $ 17,200,000 $ 288,200,000 Stock price Operating income Assets invested $ 1,968,000 $ 23,200,000 Customer service Quality of service Total revenue $ 3,570,000 $ 124,300,000 Required: Based on the above information, what is the amount of total compensation for Ben? $270,000 $341,550 $338,800 $350,800
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