How might this approach encourage poor business decisions

Assignment Help Accounting Basics
Reference no: EM13127329

Sunshine Groceries operates a rapidly expanding chain of retail grocery stores in Europe. The company has grown from 10 stores in 2009 to 50 stores in 2011 and plans to add at least 10 stores each year for the next 3 years. Top executives at the company can earn annual cash bonuses of up to 200% of salary if board-approved sales growth goals are achieved.

Explain why it might make sense for this company to award bonuses based on sales growth. How might this approach encourage poor business decisions when compared to a bonus plan tied to earnings?

Reference no: EM13127329

Questions Cloud

Compute earnings per share for 2012 : Compute earnings per share for 2012, using the weighted-average number of shares determined in part (a).
Preparing a retained earnings statement : It declared and paid a dividend of $21,000 as a cash dividend. In 2010, the company recorded and adjustment of $10,000 due to the understatement (from a math error) of 2009 depreciation. Prepare a retained earnings statement for the year ending De..
What is the molarity : What is the molarity of a 1.304 L solution that is made from 14.80 g of NaCl?Answer in units of M.
Preparing the stockholders equity section : The paid-in capital in excess of par value on the preferred stock was $12,000. Retained earnings at December 31, 2010 was $172,000. Prepare the stockholder's equity section of the balance sheet, as of December 31, 2010. If need be, prepare in an E..
How might this approach encourage poor business decisions : Explain why it might make sense for this company to award bonuses based on sales growth. How might this approach encourage poor business decisions when compared to a bonus plan tied to earnings?
What effect will this have on its optimal price : Suppose a manufacturer estimates its marginal cost at $1.00 per pack, its own price elasticity at -2, and sets its price at $2.00. The company's settlement obligations are expected to raise its average total cost per pack by about $.60. What effec..
Chrysanthemums : This week's literary club meeting discussion was supposed to be about John Steinbeck's "Chrysanthemums," but it was cancelled due to bad weather.
Elucidate net income would ravine corporation have reported : Elucidate net income would Ravine Corporation have reported for each of the years, assuming Ravine accounts for the intercorporate investment using (1) the cost method and (2) the equity method?
How much heat is produced when 12.5 grams of ethanol burns : Gasohol contains ethanol (C2H5OH) which when burned reacts with oxygen to produce CO2 (g) and H2O(g). How much heat is produced when 12.5 grams of ethanol burns.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Amount of net capital gain and net ordinary income

The ABC stock was purchased for $1,800 and sold for $3,200. In 2010 (the year of sale), Jack should report what amount of net capital gain and net ordinary income?

  Excess of tax depreciation over book depreciation

Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2011-2014. Deferral, for book purposes, of $25,000 of rent received in advance. The rent will be earned in 2011.

  Major expected costs-benefits for globalized businesses

With the globalization of corporate business and cross border security listings, the need for a common set of accounting standards to be applied worldwide emerged to the surface. Both the IASB and the FASB have taken steps towards this goal.

  Requesting an audit of business

Victor called you and was in a panic as he had just received a letter from the IRS, requesting an audit of his business. The letter specifically asked for support for the $ 150,000 truck operating expense. Victor had no receipts.

  Securities business

How may an online securities company (ETrade, Schwab, etc.) differentiate themselves in market? What are the opportunities for future growth? Please give a detailed response.

  What is its sustainable growth rate

A company has a retention rate of 50%, sales of $25,000, beginning equity of $50,000 and profit margins of 10%, an asset turnover ratio of .75 and debt of $10,000. What is its sustainable growth rate?

  Prepare the journal entries to record the exchange

Holyfield Corporation wishes to exchange a machine used in its operations. Holyfield has received the following offers from other companies in the industry.

  What factors should be considered in making an estimate

What factors should be considered in making an estimate of the loss accrual? What information should management disclose in the footnotes to the financial statements concerning this purchase commitment?

  Financial statement analysis

he gross profit on the sale of a pair of shoes is 39%,if expenses are 25% of the selling price and the cost price is $17.95, what is the selling price and the gross profit in dollars?

  Calculate net income-balance in retaining earnings

Calculate the amount of additional investment that the stockholders made during 2011. Assuming that the corporation declared and paid $10,000 in dividends during 2011, calcuate the amount of net income earned by the corporation during 2011.

  Interest using the acquisition method

On January 1, 2009, Glenville Co. acquired 80,000 of the 100,000 shares outstanding in Acron Corp. for $500,000. The fair value of Acron's net assets was $600,000 and Glenville will account for its interest using the acquisition method.

  Journal entry to record purchase of direct materials

In a manufacturing company the proper journal entry (without numbers) to record the purchase of direct materials would be:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd