Brandon King had always described himself as a no-nonsense manager "focused on the

'bottom line.'" To make sure that Walter was similarly focused on generating profit,

Brandon set a "stretch target" of a 15% increase in profit for 2017 for total target profit of $3,674,250 (= 1.15 x $3,195,000 profit for 2016). He also structured Walter's

compensation as follows:

o Base pay = $250,000

o Incentive pay = 10% of profit between $3,195,000 and $3,674,250 plus 20% of

any profit greater than $3,674,250.

2017 Results

To Brandon's surprise, profit in 2017 was $4,500,000 and Walter's total compensation

was well over $400,000!

Calculate the amount of compensation earned by Walter Cranston in 2017 based on the company's existing profit-based performance plan.