You are the manager of the Paint Department. You receive the income from the Senior Manager with the following memo to the three department managers attached.
Income Statement Sharp Hardware Store For the year ended 30 June 2015
|
|
Hardware
|
Plumbing
|
Paint
|
Total
|
|
|
$
|
$
|
$
|
$
|
|
Sales
|
858,000
|
462,000
|
227,500
|
1,547,500
|
|
Lest cost of goods sold
|
399,250
|
215,750
|
68,250
|
683,250
|
|
Gross Profit
|
458,750
|
246,250
|
159,250
|
864,250
|
|
Less Expenses
|
|
|
|
|
|
Salaries-Manager
|
30,000
|
30,000
|
30,000
|
30,000
|
|
Salaries-other
|
225,000
|
120,000
|
140,000
|
485,000
|
|
Office expenses
|
33,267
|
17,913
|
8,820
|
60,000
|
|
Telephone
|
15,219
|
8,195
|
4,036
|
27,450
|
|
Supplies
|
55,000
|
39,600
|
15,400
|
110,000
|
|
Rent
|
40,000
|
20,000
|
20,000
|
80,000
|
|
|
398,486
|
235,708
|
218,256
|
852,450
|
|
Net Profit(Loss)
|
60,264
|
10,542
|
(59,006)
|
11,800
|
Performance this year is disappointing, particularly the Paint department which has recorded a loss of nearly $60 000. As a result, to improve performance in the future, a new system is going to be implemented. A bonus of $5 000 will be paid to one department manager at the end of next year on the basis of which department records the highest profit.
Comment on the new policy from your point of view