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Margaret earns a bonus set at 5% of her product line's actual operating income. How much is she currently expecting for her bonus? If
Margaret earns a bonus set at 5% of her product line's actual operating income. How much is she currently expecting for her bonus? If sales in the chrome line and the iron line turn out as expected, how much will Margaret's bonus be if the crystal line is dropped? Current expected bonus Bonus if the crystal line is dropped eTextbook and Media $ AA +A Margaret currently manages the polished chrome division of Bonita Broadway, a business that specializes in ceiling light fixtures. Its performance has been stable for the past few years. However, the crystal division has been losing market share, while the rustic iron and chrome divisions have been growing. For the most part, executives feel that these changes are a result of customer preferences and current trends versus the quality or prices of their products. While they expect preferences to return to the crystal product line in the next five years, a short-term decision must be made now. Budgeted financial information for Bonita Broadway's upcoming fiscal year is presented below for each division. Chrome Crystal Iron Sales $1,191,000 $426,000 $818,000 Variable costs 766,000 300,000 315,000 Contribution margin 425,000 126,000 503,000 Fixed costs 232,000 232,000 232,000 Operating income $193,000 $(106,000) $271,000 All fixed costs are currently assigned evenly to all divisions.
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