6) What does the bonus structure encourage Rebecca to do?7) If Rebecca were to produce 100,000 units, but still sell 50,000 units and the bonus structure was based on profits under a variable costing system, would she earn the bonus? Please use the following information to answer the following 8 questions:Rebecca, the manager of a division of Ruffware Dog Coats recently received a call from seniormanagement that there is an incentive promotion that will pay a $5,000 bonus if before-tax profitsin the second quarter of 2013 beat before-tax profits from the second quarter of 2012 by more than10%. Rebecca's division had earned a before-tax profit of $90,000 in the second quarter of 2012.Therefore, her division must obtain a before-tax profit of $99,000 to earn the bonus. Ruffware usesfull absorption costing to determine the before-tax income.Her estimated costs are as follows:Fixed CostsManagement salaries not associated with production $50,000Rent of the manufacturing plantUtility charges for the manufacturing plant$50,000$15,000Variable CostsSales commissions ($/dog coat sold)Maintenance on manufacturing plant ($/coat) 0.50Direct Materials ($/coat)Direct Labor ($/coat)Rates0.102.001.25Rebecca anticipates selling 50,000 dog coats in the second quarter of 2013 at a unit price of$8/coat. *Do not consider the potential "bonus" as part of the costs in your analysis.

Working note : Particularl Amount $ Amount $ Sales Price per coat 8 Less variable…

Answered: magement that there ne second quarter…

Business

Accounting

magement that there ne second quarter of 5. Rebecca's division refore, her division n absorption costing t

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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Question

6) What does the bonus structure encourage Rebecca to do?

7) If Rebecca were to produce 100,000 units, but still sell 50,000 units and the bonus structure was based on profits under a variable costing system, would she earn the bonus?

Please use the following information to answer the following 8 questions:
Rebecca, the manager of a division of Ruffware Dog Coats recently received a call from senior
management that there is an incentive promotion that will pay a $5,000 bonus if before-tax profits
in the second quarter of 2013 beat before-tax profits from the second quarter of 2012 by more than
10%. Rebecca's division had earned a before-tax profit of $90,000 in the second quarter of 2012.
Therefore, her division must obtain a before-tax profit of $99,000 to earn the bonus. Ruffware uses
full absorption costing to determine the before-tax income.
Her estimated costs are as follows:
Fixed Costs
Management salaries not associated with production $50,000
Rent of the manufacturing plant
Utility charges for the manufacturing plant
$50,000
$15,000
Variable Costs
Sales commissions ($/dog coat sold)
Maintenance on manufacturing plant ($/coat) 0.50
Direct Materials ($/coat)
Direct Labor ($/coat)
Rates
0.10
2.00
1.25
Rebecca anticipates selling 50,000 dog coats in the second quarter of 2013 at a unit price of
$8/coat. *Do not consider the potential "bonus" as part of the costs in your analysis.

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