Question
Ben Johnson is the manager of the jewelry department of a large chain of department stores. The department store has succeeded on the basis of
Ben Johnson is the manager of the jewelry department of a large chain of department stores. The department store has succeeded on the basis of customer service and quality of merchandise. As a manager, Ben is compensated with a salary of $260,000 and a bonus based on his units operating income. The bonus pool is 10% of company-wide operating income. When the units return on invested assets exceeds the rate of return of the whole company, the unit manager is included in the bonus pool, which is divided evenly among the managers who qualify for the bonus. In the current period, 20 managers qualified for the bonus, including Ben. Jewelry Department Whole Company Stock price $ 46 Operating income $ 1,958,000 $ 17,100,000 Assets invested $ 23,100,000 $ 288,100,000 Customer service 4 5 Quality of service 4 8 Total revenue $ 3,560,000 $ 124,200,000 Required: Based on the above information, what is the amount of total compensation for Ben?
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