50.1K

Verified Solution

Link Copied!

$(6$ points$)$ SWA Inc. operates with three divisions: Thailand, Vietnam, Taiwan. Below are selected

results for each division over the last two years.

$(7$ points$)$ Continuing with SWA Inc. from the previous page, SWA's manager compensation is an

annual salary and qualifying bonus award. Managers qualify for the bonus award when their division

ROA equals or exceeds SWA Inc. ROA. The bonus is calculated as SWA Inc. Residual Income divided by

the number of qualifying managers who then share equally in the bonus pool. Residual Income is

defined as Operating Income minus an interest charge of $10\%$ of Average Total Assets.

a$.$ For $2023,$ calculate each division's ROA and identify which divisions qualify for the bonus pool $($report

percentages rounded two decimals$).$

b$.$ Calculate the $2023$ bonus pool amount for total SWA Inc. and the bonus amount per manager.

c$.$ Based on your analysis, identify "Yes" or $"$No$"$ if the bonus compensation plan helps SWA Inc. be goal

congruent. Next discuss the reasons for your answer$\mathrm{.}24.(7$ points$)$ Continuing with SWA Inc. from the previous page, SWA$$s manager compensation is an annual salary and qualifying bonus award. Managers qualify for the bonus award when their division ROA equals or exceeds SWA Inc. ROA. The bonus is calculated as SWA Inc. Residual Income divided by the number of qualifying managers who then share equally in the bonus pool. Residual Income is defined as Operating Income minus an interest charge of $10\%$ of Average Total Assets.

a$.$ For $2023,$ calculate each division$$s ROA and identify which divisions qualify for the bonus pool $($report percentages rounded two decimals$).$

b$.$ Calculate the $2023$ bonus pool amount for total SWA Inc. and the bonus amount per manager.

c$.$ Based on your analysis, identify $$Yes$$ or $$No$$ if the bonus compensation plan helps SWA Inc. be goal congruent. Next discuss the reasons for your answer.

Answer & Explanation Solved by verified expert

See Answer