Household Brands Inc. (HBI) manufactures household goods in the United States. The company made two acquisitions in previous years to diversify their product lines. In 2011, HBI acquired cosmetics and consumer electronics companies. HBI is now, in 2020, comprised of three divisions: cosmetics, household, and consumer electronics. The following information (in thousands of dollars) presents operating revenues, operating income, and invested assets of the company over the last three years: Revenue Operating Income Assets Cosmetics 2018 $ 25,400 $ 2,500 $ 9,200 2019 19,800 1,300 8,100 2020 20,000 1,400 9,770 Household 2018 15,900 1,700 7,260 2019 16,100 1,000 7,210 2020 12,300 880 6,680 Electronics 2018 13,300 1,700 4,330 2019 9,560 1,000 4,130 2020 8,700 1,180 4,150 Household Brands Total 2018 54,600 5,900 20,790 2019 45,460 3,300 19,440 2020 41,000 3,460 20,600 The current compensation package is an annual bonus award. The senior executives share in the bonus pool. The pool is calculated as 20% of the annual residual income of the company. The residual income is defined as operating income minus a cost of capital charge of 15% of invested assets. Round all calculations to two significant digits. The total amount of the bonus pool for 2020 is: Multiple Choice $370,300. $556,300. $74,000. $76,800. $414,300.
Household Brands Inc. (HBI) manufactures household goods in the United States. The company made two acquisitions in previous years to diversify their product lines. In 2011, HBI acquired cosmetics and consumer electronics companies. HBI is now, in 2020, comprised of three divisions: cosmetics, household, and consumer electronics. The following information (in thousands of dollars) presents operating revenues, operating income, and invested assets of the company over the last three years: Revenue Operating Income Assets Cosmetics 2018 $ 25,400 $ 2,500 $ 9,200 2019 19,800 1,300 8,100 2020 20,000 1,400 9,770 Household 2018 15,900 1,700 7,260 2019 16,100 1,000 7,210 2020 12,300 880 6,680 Electronics 2018 13,300 1,700 4,330 2019 9,560 1,000 4,130 2020 8,700 1,180 4,150 Household Brands Total 2018 54,600 5,900 20,790 2019 45,460 3,300 19,440 2020 41,000 3,460 20,600 The current compensation package is an annual bonus award. The senior executives share in the bonus pool. The pool is calculated as 20% of the annual residual income of the company. The residual income is defined as operating income minus a cost of capital charge of 15% of invested assets. Round all calculations to two significant digits. The total amount of the bonus pool for 2020 is: Multiple Choice $370,300. $556,300. $74,000. $76,800. $414,300.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Household Brands Inc. (HBI) manufactures household goods in the United States. The company made two acquisitions in previous years to diversify their product lines. In 2011, HBI acquired cosmetics and consumer electronics companies. HBI is now, in 2020, comprised of three divisions: cosmetics, household, and consumer electronics. The following information (in thousands of dollars) presents operating revenues, operating income, and invested assets of the company over the last three years:
| Revenue | Operating Income | Assets | ||||||||||
| Cosmetics | ||||||||||||
| 2018 | $ | 25,400 | $ | 2,500 | $ | 9,200 | ||||||
| 2019 | 19,800 | 1,300 | 8,100 | |||||||||
| 2020 | 20,000 | 1,400 | 9,770 | |||||||||
| Household | ||||||||||||
| 2018 | 15,900 | 1,700 | 7,260 | |||||||||
| 2019 | 16,100 | 1,000 | 7,210 | |||||||||
| 2020 | 12,300 | 880 | 6,680 | |||||||||
| Electronics | ||||||||||||
| 2018 | 13,300 | 1,700 | 4,330 | |||||||||
| 2019 | 9,560 | 1,000 | 4,130 | |||||||||
| 2020 | 8,700 | 1,180 | 4,150 | |||||||||
| Household Brands Total | ||||||||||||
| 2018 | 54,600 | 5,900 | 20,790 | |||||||||
| 2019 | 45,460 | 3,300 | 19,440 | |||||||||
| 2020 | 41,000 | 3,460 | 20,600 | |||||||||
The current compensation package is an annual bonus award. The senior executives share in the bonus pool. The pool is calculated as 20% of the annual residual income of the company. The residual income is defined as operating income minus a cost of capital charge of 15% of invested assets. Round all calculations to two significant digits.
The total amount of the bonus pool for 2020 is:
Multiple Choice
-
$370,300.
-
$556,300.
-
$74,000.
-
$76,800.
-
$414,300.
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