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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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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