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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...
2. 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
Requirements:
a. Find (i) total sales revenue, (ii) selling price, (ii) rate of return on investment, and (iv) markup percentage on full cost for this produce.
b. 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 a, calculate the new selling price.
