The new chief executive officer (CEO) of

Ruiz

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:

.	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 $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 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.

total sales revenue ?

number of unit produced and sold $500000 units

selling price ?

operating income $180000

total investment in assets $2250000

Variable cost per unit $ 4.00

Fixed costs for the year $ 2500000

Requirement 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.

Begin by calculating the (a) total sales revenue. Rearrange the income statement formula to solve for the amount.

Operating income	$180,000
Fixed costs	2,500,000
Contribution margin	2,680,000
Variable costs	2,000,000
Sales revenue	$4,680,000

(Round your answer to the nearest cent.)

(b) The selling price per unit is

$9.36

.

(c) 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.)

(

Operating income

Total investment

)

=

Return on investment

(

$180,000

$2,250,000

)

=

8

%

(d) 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 per unit

Full cost per unit

)

=

Markup on full costs

(

$0.36

$9.00

)

=

4.00

%

Requirement 2. The new 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.

Begin by calculating the new total revenues. (Round your answer to the nearest whole dollar.)

New fixed costs	$2,275,000
New total variable costs	1,850,000
New total costs	4,125,000
Markup percentage	104.00%
New total revenues	$4,290,000

(Round your answer to the nearest cent.)

The new selling price is

$8.58

.

Requirement 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 operating income (loss). (Enter operating losses with a minus sign or parentheses.)

Sales revenue
Variable costs
Contribution margin
Fixed costs
Operating income (loss)

please reply as soon as possible.