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Acct 434 Week 5 homework

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Question;Acct 434 Week 5 homework;Cost-plus, target pricing, working backward. The new CEO of;Radco Manufacturing has asked for a variety of information about the;operations of the firm from last year. The CEO is given the following;information, but with some data missing;Total sales revenue?;Number of units produced and sold 500,000 units;Selling price?;Operating income $195,000;Total investment in assets $2,000,000;Variable cost per unit $3.75;Fixed costs for the year $3,000,000;Required;1.Find (a) total sales revenue, (b) selling price, (c) rate of return;on investment, and (d) markup percentage on full cost for this product.;2.The new CEO has a plan to reduce fixed costs by $200,000 and;variable costs by $0.60 per unit while continuing to produce and sell;500,000 units. Using the same markup percentage as in requirement 1;calculate the new selling price.;3.Assume the CEO institutes the changes in requirement 2 including;the new selling price. However, the reduction in variable cost has;resulted in lower product quality resulting in 10% fewer units being;sold compared to before the change. Calculate operating income (loss).

 

Paper#55914 | Written in 18-Jul-2015

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