If u have any question ask me

Problem 1 Pilatest Inc specializes in the manufacture of pilates training equipment, a eld that has become increasingly competitive. Approximately 2 years ago, Elizabeth Gutierrez, president of PilatesPro, decided to revise the bonus plan (based, at the time, entirely on operating income) to encourage division managers to focus on areas that were important to customers and that added value without increasing cost. In addition to a protability incentive, the revised plan includes incentives for reduced rework costs, reduced sales returns, and ontime deliveries. The company calculates and rewards bonuses semiannually on the following basis: A base bonus is calculated at 2% of operating income; this amount is then adjusted as follows: a. (i) Reduced by excess of rework costs over and above 2% of operating income (ii) No adjustment if rework costs are less than or equal to 2% of operating income I]. (i) Increased by $4,000 if more than 98% of deliveries are on time and by $1,500 if 9698% of deliveries are on time (ii) No adjustment if on-tinle deliveries are below 96% e. (i) Increased by $2,500 if sales returns are less than or equal to 1.5% of sales (ii) Decreased by 50% of excess of sales returns over 1.5% of sales If the calculation of the bonus results in a negative amount for a particular period, the manager simply receives no bonus, and the negative amount is not carried forward to the next period. Results for PilatesPro' s Northern division and Southern division for 2019, the first year under the new bonus plan, follow. In 2018, under the old bonus plan, the Northern division manager earned a bonus of $20,295 and the Southern division manager received a bonus of $15,8 30. Northern Division Southern Division Jan. 1, 2019, to July 1, 2019, to Jan. 1, 2019, to July 1, 2019, to June 30, 2019 Dec. 31, 2019 June 30, 2019 Dec. 31, 2019 Revenues $3,150,000 $3,300,000 $2,137,500 $2,175,000 Operating income $346,500 $330,000 $256,500 $304,500 Oil-time delivery 95.4% 97.3% 98.2% 94.6% Rework costs $8,625 $8,250 $4,500 $6,000 Sales returns $63,000 $52,500 $33,560 $31,875 Required: 1. Why did Gutierrez need to introduce these new performance measures? That is, why does Gutierrez need to use these performance measures in addition to the operating-income numbers for the period? 2. Calculate the bonus earned by each manager for each 6-month period and for 2019 overall. 3. What effect did the change in the bonus plan have on each manager's behavior? Did the new bonus plan achieve what Gutierrez wanted? What changes, if any, would you make to the new bonus plan