Reference no: EM132883653
Question - Omega Trading operates a retail store in Faith, Hope, and Love. Omega's corporate headquarters is located in Manila, and the company uses responsibility accounting to evaluate performance. The following information relates to the Faith facility:
The store sold 100,000 units at P20.00 each, after having purchased the units from various suppliers for P13. Faith salespeople are paid a 10% commission based on gross sales pesos.
Faith's sales manager oversees the placement of local advertising contracts, which cost P88,000 and 5% of gross sales pesos. Local property taxes amounted to P15,000.
The sales manager's P95,000 salary is set by Faith's store manager. In contrast, the store manager's P120,000 salary is determined by Omega's vice president.
Faith incurred P20,000 of other noncontrollable costs along with P10,000 of income tax expense.
Nontraceable (common) corporate overhead totaled P68,000.
What the income that will be used to evaluate the manager of Faith?
a. 517,000
b. 312,000
c. 217,000
d. 377,000