PROBLEM #1.NO GOOD DEED.GOESUNPUNSHED Larry Simmons manages the Sporting Goods division of All-Sports Inc. All Sports Inc. tracks the return on investment of each division. All Sports Inc. rewards its managers with a $3,000 bonus for each percentage point their return on investment exceeds a target rate of 8%. The Sporting Goods division reported the following departmental income last year Sales Cost of goods sold Gross profit Operating expenses Net income $8,490,000 4250,000 4,240,000 3,040,000 $1,200,000 The average invested assets for the Sporting Goods division are $8,000,000. Due to Larry's outstanding performance, the top management of All-Sports Inc. has decided Larry should also manage a new division, Sportswear. The Sportswear division will require average invested assets of $2,000,000, and is projected to earn net income of $100,000. Required Compute Larry's bonus from managing the Sporting Goods division. Compute Larry's bonus if he manages both the Sporting Goods and Sportswear divisions 1. 2. 3. 3. How do you think Larry will react when assigned the Sportswear division, after computing his expected bonus from managing both the Sporting Goods and Sportswear divisions