Advanced Management Accounting Case:

The case describes a company whose manager is concerned that the operating profit measure included in the companys bonus plan was too narrowly focused. He implemented a new bonus plan that reduced the weighting of importance placed on operating profit and that included more measures, including on-time deliveries, sales returns, patent applications, scrap and rework costs, and customer satisfaction. 1. What was the purpose of the change? 2. Calculate the bonus earned by each manager for each 6-month period and for the year 2010. 3. Evaluate the new plan. Is there any evidence that it produced the desired effects? What changes to the new plan would you suggest, if any?