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:

 

 

 

  1. Find (i) total sales revenue, (ii) selling price, (ii) rate of return on investment, and (iv) markup percentage on full cost for this produce.

 

 

 

  1. 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.

 

    • 10 years ago
    ACC- Radco Manufacturing Solution
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