The ABC Company enjoys profitable operations for its past ten years of existence. The company president proposed to the Board of Directors an incentive compensation plan where the general manager would be entitled to a year-end bonus under the following alternative schemes:
The ABC Company enjoys profitable operations for its past ten years of existence. The company president proposed to the Board of Directors an incentive compensation plan where the general manager would be entitled to a year-end bonus under the following alternative schemes:
Alternative 1: 8% bonus based on profit before bonus and income tax in excess of P 5,000,000.
Alternative 2: 5% bonus based on profit after both bonus and income tax.
Alternative 3: 3% bonus based on profit after bonus but before income tax.
ABC Company's profit before bonus and income tax for the year ended December 31, 2019 is P 8,000,000. Assume an income tax rate of 30%.
How much is the general manager's bonus for 2019 under Alternative 1,2, and 3?
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