19_BirchPaperNegotiationsProfit&BonusComputations

19_BirchPaperNegotiationsProfit&BonusComputations -...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: SAMPLE CALCULATION OF BONUSES Say that the results of the negotiations were transfer prices of: $200 from Southern to Thompson $350 from Thompson to Northern Therefore, divisional results would be as follows (note that the numbers in boxes are the ones that will change as a result of negotiations. Statements of Contribution Southern: Revenue (transfer price to Thomspon from negotiations) 200.00 Variable costs (from case) 168.00 Southern's contribution on sale to Thompson 32.00 Thompson: Revenue (transfer price to Northern from negotiations) 350.00 Variable costs: Transfer price from Southern (from above) 200.00 Other variable costs (from case) 120.00 Total variable costs 320.00 Thompson's contribution on sale to Northern 30.00 Northern: Revenue - sales price to outsiders (assume $430+20% markup) 516.00 Variable costs: Transfer price from Thompson (from above) 350.00 Northern's contribution on sale to outsiders 166.00 Total for Birch: Revenue (sales price to outsiders, above) 516.00 Variable costs: at Southern (from case) 168.00 at Thompson (from case) 120.00 Total variable costs 288.00 Birch's contribution on sale to outsiders 228.00 Based on the resulting transfer prices, each group's bonus is computed as follows: The bonus pool is the number of people in your negotiating group x two pieces of candy per person. Your group's share of the bonus pool distributed will be based on the following: Number of people in negotiating group (i.e., all divisions) 12 Size of bonus pool, in pieces of candy 24 To Southern: (Southern's divisional contribution, from negotiations 32 divided by Birch's actual contribution ) 228 x pieces of candy in bonus pool 24 total pieces to Southern 3 To Thompson: (Thompson's divisional contribution, from negotiations 30 divided by Birch's actual contribution ) 228 x pieces of candy in bonus pool 24 total pieces to Thompson 3 To Northern: (Northern's divisional contribution, from negotiations 166 divided by Birch's actual contribution ) 228 x pieces of candy in bonus pool 24 total pieces to Northern 17 CALCULATION OF BONUSES (for use in class) Statements of Contribution Southern: Revenue (transfer price to Thomspon from negotiations) Variable costs (from case) 168.00 Southern's contribution on sale to Thompson (168.00) Thompson: Revenue (transfer price to Northern from negotiations) Variable costs: Transfer price from Southern (from above) 0.00 Other variable costs (from case) 120.00 Total variable costs 120.00 Thompson's contribution on sale to Northern (120.00) Northern: Revenue - sales price to outsiders (assume $430+20% markup) 516.00 Variable costs: Transfer price from Thompson (from above) 0.00 Northern's contribution on sale to outsiders 516.00 Total for Birch: Revenue (sales price to outsiders, above) 516.00 Variable costs: at Southern (from case) 168.00 at Thompson (from case) 120.00 Total variable costs 288.00 Birch's contribution on sale to outsiders 228.00 Based on the resulting transfer prices, each group's bonus is computed as follows:...
View Full Document

Page1 / 10

19_BirchPaperNegotiationsProfit&BonusComputations -...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online