Incentive compensation plan problem

Assignment Help Accounting Basics

Reference no: EM13131818

Wright, Inc. has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent of the company's income after deductions for bonus and income taxes. Income before bonus and income taxes is $400,000. The effective income tax rate is 30 percent. How much is the bonus (rounded to the nearest dollar)?

a. $40,000

b. $30,108

c. $28,000

d. $26,168

Reference no: EM13131818

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