PROBLEM 1 - Magnolia Manufacturing

Requirement A Requirement B
Profit before using technique $ 6,000,000.00 Profit before using technique $ 8,500,000.00
New technique will increase profit by 20% Target Profit $ 6,000,000.00
New Profit (6M x 1.2) $ 7,200,000.00 Bonus Profit $ 2,500,000.00
Target Profit $ 6,000,000.00 Bonus Profit in % 42%
Since increase in profit is 42% then there will be a
Increase in Profit $ 1,200,000.00 4% bonus
Increase in Profit in % 20% Base Salary

Since 1% bonus will be paid for every 10% increase in profit,

2% bonus is to be paid due because the profit is 20%
Kevin $ 180,000.00
Base Salary Michelle $ 240,000.00

Kevin $ 180,000.00 Bonus Salary 2% bonus

Michelle $ 240,000.00 Kevin $ 7,200.00
Bonus Salary 2% bonus Michelle $ 9,600.00
Kevin $ 3,600.00
Michelle $ 4,800.00

PROBLEM 2 - Consulting Firm

Given: Gigabytes Number of Consultants
Corporate 97,500 135
Government 52,500 165
Total 150,000 300
Gigabytes
Cost of computer support $ 9,000,000.00
Total Gigabytes 150,000
Cost Allocation Rate $ 60.00
Cost Allocated:
Corporate $ 5,850,000.00
Government $ 3,150,000.00
Consultants
Cost of computer support $ 9,000,000.00
Total consultants 300
Cost Allocation Rate $ 30,000.00
Cost Allocated:
Corporate $ 4,050,000.00
Government $ 4,950,000.00
Profit after technique $ 10,200,000.00
Target Profit $ 6,000,000.00
Bonus Profit $ 4,200,000.00
Bonus Profit in % 70%
Maximum bonus is 5 percent of salary so
even if 70% sya, 5% lang bonus
Base Salary

Kevin $ 180,000.00
Michelle $ 240,000.00

Bonus Salary 2% bonus BONUS CHANGE

Kevin $ 9,000.00 $ 1,800.00
Michelle $ 12,000.00 $ 2,400.00