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The management of a store with three sales departments plans to install a bonus system...

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Accounting

The management of a store with three sales departments plans to install a bonus system for department managers. Do you think the bonus system should be based on each department contribution margin or on the departments net income after allocating all administrative expenses? Explain.

Is it better for managers to use contribution margin analysis rather than net income analysis when deciding whether to retain, expand, or contract operations?

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