pic $6$ Assignment

Question $5,$ P$13-26($similar to$)$

HW Score: $1\mathrm{.}18\%,1\mathrm{.}18$ of $100$ points

Part $1$ of $10$

Points: $0$ of $15$

$($Click the icon to view the variety of operations information.$)$

Read the requirements.

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.

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Sales revenue

Requirements

Find $($a$)$ total sales revenue, $($b$)$ selling price, $($c$)$ rate of return on investment, and $($d$)$ markup percentage on full cost for this product.

The new CEO has a plan to reduce fixed costs by $$250,000$ and variable costs by $$0\mathrm{.}50$ 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.

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 $10\%$ fewer units being sold compared to before the change. Calculate operating income $($loss$).$

What concerns, if any, other than the quality problem described in requirement $3,$ do you see in implementing the CEO's plan? Explain briefly.

Data table

Total sales revenues

Number of units produced and sold

$500,000$ units

Selling price

Operating income

Total investment in assets

Variable cost per unit

Fixed costs for the year

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$$

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