Data Table x ? 500,000 units ? Total sales revenues Number of units produced and sold Selling price Operating income Total investment in assets Variable cost per unit Fixed costs for the year $ $ 195,000 $ 2,000,000 $ 3.75 $ 3,000,000 * Requirements 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 15% fewer units being sold compared to before the change. Calculate operating income (loss). 4. What concerns, if any, other than the quality problem described in requirement 3, do you see in implementing the CEO's plan? Explain briefly. The new chief executive officer (CEO of Rolle 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 Click the icon to view the variety of operations information Read the aucements Requirement 1. Find (a) total sales revenue, () selling prico. (c) rate of return on investment, and (c) markup percentage on full cost for this product Begin by calculating the (a) total sales revenue, Roartanon the income statement formula to solve for the amount Sales revenue (Round your answer to the nearest cent) (b) The selling price per units (e) Calculate the rate of return on investment Determine the formula you will use and then enter the amounts. (Round the return on investment to the nearest whole percentage.) Retum on investment (a) Calculate the markup percentage on full cost for this product. Determine the formula you will use and then enter the amounts. (Enter the per unit amounts to the nearest cent. Enter the markup as a percentage rounded to two decimals) Markup on full costs Requirement 2. The new CEO has a plan to reduce fixed costs by $200,000 and variable costs by S0.60 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 Begin by calculating the new total revenues. (Round your answer to the nearest whole dotar New foxed cost New total variable costs New total costs Markup percentage Now total revenues (Round your answer to the nearest cont.) The new selling price Requirement 3. Assume the CEO Institutes the changes in requirement including the new seling price. However, the reduction in variable cost has resulted in tower product quality resulting in 15% fewer units being sold compared to before the change. Calculate operating income (loss). (Enter operating losses with a minus sign or parentheses.) Sales revenue Variable costs Contribution margin Fixed costs Operating income (los) Requirement 4. What concerns. If any other than the quality problem described in requirement 3, do you see in implementing the CEO's plan? Explain briefly O A The CEO has not considered customers in these pricing decisions. The concern the CEO must ask is Wil customers continue to want the product at these prices? B. The CEO has not considered outsourcing manufacturing work to decrease wages. The concem the CEO must ask is Wa outsourcing manufacturing cause the work to be lower quality OC. The CEO has not considered implementing an employee teamwork scenario. The concern the CEO must ask is Will the employees be open to working on projects in a team setting?" OD. The CEO has not considered inflation in manufacturing supply prices. The concern the CEO mustask is Will they be forced to raise prices due to infiation but competitors not raise prices
