The new CEO of Giant Manufacturing has asked for a variety of information about a new product of the company 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	$180,000
Total investment in assets	$2,250,000
Variable cost per unit	$4.00
Fixed costs for the year	$2,500,000

Required

1. Determine the:

1. Total sales revenue
2. Selling price
3. Rate of return on investment
4. Markup percentage on full cost for this product

2. The CEO has a plan to reduce fixed costs by $225,000 and variable costs by $0.30 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 5% fewer units being sold compared to before the change. Calculate the operating income (loss).

4. What concerns, if any, other than the quality problem, do you see in implementing the CEOs plan? Explain briefly.