Question $4$

The Olympic Car Wash Company owned and operated $30$ car washes in Belgium. The general managers of each of the $30$ locations reported to Jacques Van Raemdonck, Olympics' chief operating officer. At the end of each quarter, Jacques had to evaluate the performances of each of the car wash locations. His evaluations determined the size of a bonus pool that was allocated to personnel at the location. If the location achieved its budgeted profit target, $$3,000$ was put into the bonus pool. The pool was also augmented by $$1$ for every $$10$ the location exceeded its profit target.

The bonus contract gave Jacques the right to make subjective adjustments for the effects of factors he deemed outside the control of personnel at the location. By far the largest uncontrollable factor that Jacques had to consider was, the weather. In particular, sales volume dropped to zero when it rained, and it rained frequently in Belgium. The budget, which was updated quarterly, was prepared based on an assumption of hours of good weather. Inevitably, though, those assumptions were not accurate. During the Spring quarter $2002,$ it rained many more hours than were assumed in the company's budget, and actual profits for all of the locations were far below the budgeted profit level. The results for the Aalst location are shown in Table $1.$ Table $2$ shows some operating assumptions and statistics for the quarter on which the results in Table$1$ are based. The Aalst location is open every day, $10$ hours per day when it is not raining. The car wash employees are paid the legally required minimum wage plus a fixed amount for each car wash completed, so labor costs are largely variable with revenues.

Question

How large should the bonus pool be for the Aalst location? Show all the workings

Table $1$

$\backslash$table$[[,$Budget $($$$),$Actual $($$$),$Variance $($$$)],[$Revenue$,184,000,124,080,-59,920$

Give step by step answer. Show all the steps