Exercise 12-28 (Algo) Evaluating Management Control Systems-Ethical Considerations (LO 12-1, 3, 4, 6) Westphalia Corporation produces audio equipment for home, office, and vehicles. The production manager (PM) and marketing mesnager (MM) are both are paid a fiat salary and are eligible for a bonus. The bonus is equal to 2 percent of company profit that is in excess of a specified target profit. (All profit numbers exclude any bonus.) The maximum bonus is 10 percent of base salary. The PM's base solary is $200,000, and the MM's is $340,000. The target profit for this year is $11 million. The production maneger has been approached by an engineering consuiting firm that is The target pront for this year is sil milion. The production maneger has beence Westphalia a new manufacturing technique that would increase annual profit by 15 percent, after deducting the ilicensing fee. The PM is unsure whether to employ the new technique this yeat, 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 $11 million, By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? b. Suppose that profit without using the technique this year will be $12 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? c. Suppose that profit without using the technique this year will be $10 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? Complete this question by entering your answers in the tabs below. Suppose that profit without using the technique this year will be $12 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? Note: Enter your answers in doliars, not in millions. Exercise 12-28 (Algo) Evaluating Management Control Systems-Ethical Considerations (LO 12-1, 3, 4, 6) Westphalia Corporation produces audio equipment for home, office, and vehicles. The production manager (PM) and marketing manager (MM) are both are paid a flat salary and are eligible for a bonus. The bonus is equal to 2 percent of company profit that is in excess of a specified target profit. (All profit numbers exclude any bonus.) The maximum bonus is 10 percent of base salary. The PM's base salary is $200,000, and the MM's is $340,000. The target profit for this year is $11 million. The production manager has been approached by an engineering consulting firm that is willing to license to Westphalia a new manufacturing technique that would increase annual profit by 15 percent, after deducting the licensing fee. The PM 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 $11 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? b. Suppose that profit without using the technique this year will be $12 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? c. Suppose that profit without using the technique this year will be $10 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? Complete this question by entering your answers in the tabs below. Suppose that profit without using the technique this year will be $10 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? Note: Enter your answers in dollars, not in millions. Exercise 12-28 (Algo) Evaluating Management Control Systems-Ethical Considerations (LO 12-1, 3, 4, 6) Westphalia Corporation produces audio equipment for home, office, and vehicles, The production manager (PM) and marketing manager (MM) are both are paid a flat solary and are eligible for a bonus. The bonus is equal to 2 percent of company profit that is in excess of a specified target profit. (All profit numbers exclude any bonus.) The maximum bonus is 10 percent of base salary, The PM's base salary is $200,000, and the MM's is $340,000. The target profit for this year is $11 million. The production manager has been approached by an engineering consulting firm that is willing to license to Westphalia a new manufacturing technique that would increase annual profit by 15 percent, after deducting the icensing fee. The PM 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 $11 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technicue? b. Suppose that profit without using the technique this year will be $12 million. By how much will the PM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? c. Suppose that profit without using the technique this year will be $10 million. By how much will the PM"s bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? Complete this question by entering your answers in the tabs below. Suppose that profit without using the technique this year will be $11 million. By how much will the pM's bonus change if the new technique is adopted? By how much will the MM's bonus change if the PM decides to adopt the new technique? Note: Enter your answers in doliars, not in millions
