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#75156 | Written in 18-Jul-2015Price : $19