Dulcimer Co. Management Accounting: Incentive Bonus Allocation

The following data are taken from the management accounting reports of Dulcimer Co.:

Division A Division B Division C

Income from operations $1,900,000 $1,450,000 $1,450,000 Total service department charges 1,700,000 1,050,000 1,100,000

If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges, it follows that

a. Division B's manager is given the bonus b. Division C's manager is given the bonus c. Division B's and Division C's managers divide the bonus d. Division A's manager is given the bonus

Answer: d. Division A's manager is given the bonus, as they achieved the highest income from operations before service department charges.