• ROI Bonus = Return on Investment for the year x 50%
• RI Bonus = Residual Income from all investments throughout the year
• ROS Bonus = Return on Sales x 30%

Bonus formula = ROI Bonus x ROS Bonus x RI Bonus

Example: ROI Bonus x ROS Bonus x RI Bonus

(15% x 50%) x (40% x 30%) x $2,500,000

(7.5%) x (12%) x $2,500,000

$22,500

The Calgary division of TDI had the following financials in 2023:

• Sales were $10,500,000
• Expenses were $7,750,000
• Cash on hand was $1,575,000
• Assets on hand were $9,800,000
• Loans outstanding were $2,250,000
• Retained Earnings was $3,975,000

Required

1. What is the annual bonus that Akash will receive for the 2023 operating year if hi?
2. If Akash had the opportunity at the end of 2023 to take on a project that would cost $1,500,000 and produce Sales of 200,000 and incur expenses of $20,000. Would he accept the project given his current bonus structure?