Question

abc ltd. generated one million canadian dollars in profits this year. abc ltd. decides to place 200,000 canadian dollars (20 percent of pre-tax profits) in a bonus pool. in previous years, this figure has ranged from zero to 50 percent of pre-tax profits. what type of formula is abc ltd. using to determine contributions into the pool? question 40select one: a. fixed percentage b. fixed threshold c. discretionary d. percentage approach

Answer 1

ABC Ltd. is using a discretionary formula to determine contributions into the bonus pool.

Step-by-step explanation:

The type of formula that ABC Ltd. is using to determine contributions into the bonus pool is discretionary. This means that the amount placed in the pool is not fixed, but rather it is determined by the company based on factors like pre-tax profits and past years' experiences. In this case, ABC Ltd. decided to place 200,000 Canadian dollars (20 percent of pre-tax profits) in the bonus pool, but in previous years, it has ranged from zero to 50 percent of pre-tax profits.