Che Jordan Corporation has three divisions, each operating as a responsibility center. To provide an incentive for divisional executive officers, the company gives divisional management a bonus equal to 17 percent of the excess of actual net income over budgeted net income. The following is Atlantic Division's current year's performance: Current Year $4,190,000 2,440,000 1,750,000 B00,000 950, 000 Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net incone The president has just received next year's budget proposal from the vice president in charge of Atlantic Division. The proposal budgets a 3 percent increase in sales revenue with an extensive explanation about stiff market competition. The president is puzzled Atlantic has enjoyed revenue growth of around 8 percent for each of the past five years. The president had consistently approved the division's budget proposals based on 3 percent growth in the past. This time, the president wants to show that he is not a fool. "I will impose a 13 percent revenue increase to teach them a lesson!" the president says to himself smugly es Assume that cost of goods sold and selling and administrative expenses remain stable in proportion to sales. Required a. Prepare the budgeted income statement based on Atlantic Division's proposal of a 3 percent increase. b-1. Prepare income statement with 8 % growth b-2. If growth is actually 8 percent as usual, how much bonus would Atlantic Division's executive officers receive if the president had approved the division's proposal? c. Prepare the budgeted income statement based on the 13 percent increase the president imposed. d. If the actual results turn out to be a 8 percent increase as usual, how much bonus would Atlantic Division's executive officers receive since the president imposed a 13 percent increase? Complete this question by entering your answers in the tabs below. Reqs C and D Req A Req 82 Req B1 Prepare the budgeted income statement based on Atlantic Division's proposal of a 3 percent increase. ces JORDAN CORPORATION Budgeted Income Statement Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income Req B1> Res A Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Reqs C and D Prepare income statement with 8 % growth . ces JORDAN CORPORATION Income Statement Sales revenue Cost of goods sold Gross profit Selling & administralive expenses Net income Req A Req B2 Complete this question by entering your answers in the tabs below. Req 82Res C and D Req A Req B1 If growth is actually 8 percent as usual, how much bonus would Atlantic Division's executive officers receive if the president had approved the division's proposal? Bonus Req B1 Reqs C and D Complete this question by entering your answers in the tabs below. Reqs C and D Req A Req B1 Req 82 Prepare the budgeted income statement based on the 13 percent increase the president imposed. If the actual results turn out to be a 8 percent increase as usual, how much bonus would Atlantic Division's executive officers receive since the president imposed a 13 percent increase? JORDAN CORPORATION es Budgeted Income Statement Sales revenue Cost of goods sold Gross profi Selling & administrative expenses Net income Bonus Req 82
