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…

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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.

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