Determine the level of net income

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Question - Cab and Jo are considering forming a partnership whereby profits will be allocated through the use of salaries and bonuses. Bonuses will be 10% of net income after total salaries and bonuses. Cab will receive a salary P40,000 and a 10% bonus or simply receiving a salary of P52,000. Both partners will receive the same amount of bonus.

Determine the level of net income that would be necessary so that Jo would be indifferent to the profit sharing option.

a.240,000

b. 300,000

c. 94,000

d. 334,000

Reference no: EM132545778

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