Determine the amount of the expected bonus

1. Downs, Inc., plans to pay its managers a bonus to encourage performance. The bonus rate is 10 percent and the bonus base is net income after bonus and after taxes (net income). Downs’s expected income before bonus or taxes is $300,000. Its tax rate is 30 percent.

Determine the amount of the expected bonus.

2. Roester, Inc., set its selling price at $120. Its markup percentage is 60 percent.

What is Roester’s cost per unit?

What is its selling margin?

What is its selling margin percentage?

Ebzery Company plans to pay its managers a bonus to encourage performance. The bonus rate is 15 percent and the bonus base is net income after bonus but before taxes. Ebzery’s expected income before bonus or taxes is $400,000. Its tax rate is 30 percent.

Determine the amount of the expected bonus.

Solution: