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A divisional manager receives a bonus of $25,000 based on the residual income from the division.During the current year, the division reported revenues of $2,500,000,
A divisional manager receives a bonus of $25,000 based on the residual income from the division.During the current year, the division reported revenues of $2,500,000, variable expenses of $950,000 and fixed expenses of $750,000. The division had $3,000,000 in average operating assets. The minimum required rate of return for the division was 20%. What was the percentage of the managers bonus?
As described on the first line. The percentage of the managers bonus is based off of residual income. Please show work.
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