Magnolia Manufacturing makes wing components for large aircraft. Kevin Choi is t

Question

Magnolia Manufacturing makes wing components for large aircraft. Kevin Choi is the production manager, responsible for manufacturing, and Michelle Michaels is the marketing managen Both managers are paid a flat salary and are eligible for a bonus The bonus is equal to 1 percent of their base salary for every 10 percent profit that exceeds a target. The maximum bonus is 6 percent of salary. Kevin's base salary is $190,000 and Michelle's is $250,000 The target profit for this year is $5 million. Kevin has read about a new manufacturing technique that would increase annual profit by 20 percent. He is unsure whether to employ the new technique this year, wait, or not employ it at all. Using the new technique will not affect the target profit. Required Suppose that profit without using the technique this year will be $5 million. By how much will Kevin's bonus change if he decides to employ the new technique? By how much will Michelle's bonus change if Kevin decides to employ the new technique? Kevin's Michelle's )Suppose that profit without using the technique this year will be $7.5 million. By how much will Kevin's bonus change if he decides to employ the new technique? By how much will Michelle's bonus change if Kevin decides to employ the new technique? Kevin's Michelle's

Explanation / Answer

Answer a

This year profit => % 5 milion, then increase by 20% ie => 6Milion

So salary of kelvin => (190000 + 2%) => $193800

Salary of Micheal => (250000 + 2%) => $255000

Answer b

This year profit is 7.5 milion and 20% increase dur to new technology => 7.5 +20% => 9 million

Overall increase in target profit by =>[ ( 9- 5) / 5 ] *100 => 80%

so bonus will become 8% for every 10 %increase in profit, but subject to 6% so

Kelvin salary => 190000+ 6% => $201400

Micheal salary => 250000+ 6% => $265000

NOTE => Other questions are revesed so cant read them, but i hav etried to read them and answering them

Answer c (1)

When profit i 4 million then after empoying technology also it will increase to 4.8 milliomn only

so kelvin bonus will not change ie NO

Answer c (2)

NO

Answer d

No

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