QUESTION S Emu Lid operates three divisions that process Emu UGG boots products. The company believes that current profitability and customer satisfaction levels are equally important to Emu Ltd's long-term success. As a result, the new plan awards a bonus equal to 2% of salary for each 4% increase in net income or 1% increase in the company's satisfaction index. For instance, increasing net income from A$3million to A$3.6 million (or 20% from its initial value) leads to a bonus of 10% of salary while increasing in the company's customer satisfaction index from 70 to 73.5 (or 5% from its initial value) also leads to a bonus of 10% of salary. There is no bonus penalty when net income or customer satisfaction declines. In financial year ended 31 December 2017 and 2018, Emu Ltd's three business divisions reported the following performance results: Men's UGG Boots Women's UGG Boots Kids' UGG boots Division Division Division 2017 2018 2017 2018 2017 2018 Net income (A$) 5,560,000 4,898,000 5,000,000 6,800,000 3.230,000 4,126,000 Customer 66 70.5 75 72.5 59 74.5 satisfaction index Required: (a) Calculate the bonus as a percentage of salary earned by each business unit executives for financial year ended 31 December 2018. (Note: % is to round down to the nearest whole number) (5 marks) (b) What factors might explain the different improvement rate for net income and customer satisfaction in the three business divisions? (3 marks) (c) Emu Lid board of directors is concerned that the 2018 bonus award may not actually reflect the overall performance of the executives. In particular, it is concerned that executives can earn big bonuses by doing well in one performance indicator but underperforming on the other. What changes can it make to the bonus plan to prevent this from happening in the future? Briefly explain. (3 marks) (Total: 1 1 marks)