Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can someone answer a-e? ) 12- -30. Evaluating Management Control Systems-Ethical Considerations Magnolia Manufacturing makes wing components for large aircraft. Kevin Choi is the pro-

Can someone answer a-e? image text in transcribed
) 12- -30. Evaluating Management Control Systems-Ethical Considerations Magnolia Manufacturing makes wing components for large aircraft. Kevin Choi is the pro- duction manager, responsible for manufacturing, and Michelle Michaels is the marketing manager. Both managers are paid a flat salary and are eligible for a bonus. The bonus is equal to 1 percent of their base salary for every 10 percent profit that eeeds tae maximum bonus is 5 percent of salary. Kevin's base salary is $180,000 and Michelle's is $240,000 The target profit for this year is S6 million. Kevin has read about a new manufacturing technique that would increase annual profit by 20 percent. He is unsure whether to employ the new technique this year, wait, or not employ it at all. Using the new technique will not affect the target Required a. Suppose that profit without using the technique this year will be $6 million. By how much wili Kevin's bonus change if he decides to employ the new technique? By how much will Michelle's bonus change if Kevin decides to employ the new technique? Suppose that profit without using the technique this year will be $8.5 million. By how much will Kevin's bonus change if he decides to employ the new technique? By how much will Michelle's bonus change if Kevin decides to employ the new technique? Suppose that profit without using the technique this year will be $4.8 million. By how much will Kevin's bonus change if he decides to employ the new technique? By how much will Michelle's bonus change if Kevin decides to employ the new technique? Is it ethical for Kevin to consider the impact of the new technique on his bonus when deciding whether or not to use it? Explain. Assess the management control system used at Magnolia Manufacturing and provide recommendations for changes, if any are required. Be sure to discuss: d. e Decision authority Performance measures Compensation

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cadmus Operational Auditing W R Institute Of Internal Auditors Professional Books Series

Authors: David S. Kowalczyk

1st Edition

047182660X, 978-0471826606

More Books

Students also viewed these Accounting questions