The new chief executive officer (CEO) of Richard 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 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. (a) The total sales revenue is (Round your answer to the nearest cent.) (b) The selling price per unit is (Round the return on investment to the nearest whole percent, X%.) (c) The rate of return on investment is (d) Calculate the markup percentage on full cost for this product. (Round your intermediary calculatons to the nearest cent and the markup to the nearest hundredth percent XXX%) The markup percentage on full cost for this product is Requirement 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. (Round intermediary calculations to the nearest whole dollar and then round the new selling price to the nearest cent.) The new selling price is 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 15% fewer units being sold compared to before the change. Calculate operating income (loss). (Enter operating losses with a minus sign or parentheses.) Operating income (loss) Requirement 4. What concems, if any, other than the quality problem described in requirement 3, do you see in implementing the CEO's plan? Explain briefly OA. The CEO has not considered customers in these pricing decisions. The concem the CEO must ask is "Will customers continue to want the product at these prices?". OB. The CEO has not considered inflation in manufacturing supply prices. The concern the CEO must ask is "Will they be forced to raise prices due to inflation but competitors not raise prices?". OC. The CEO has not considered outsourcing manufacturing work to decrease wages. The concern the CEO must ask is "Will outsourcing manufacturing cause the work to be lower quality?". OD. 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?". Data table 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 Print - X Done ? 500,000 units ? S 195,000 $ 2,000,000 S 3.75 $ 3,000,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The new chief executive officer (CEO) of Richard 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 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.
(a) The total sales revenue is
(Round your answer to the nearest cent.)
(b) The selling price per unit is
(Round the retum on investment to the nearest whole percent, X%.)
(c) The rate of return on investment is
(d) Calculate the markup percentage on full cost for this product. (Round your intermediary calculations to the nearest cent and the markup to the nearest hundredth percent XXX%)
The markup percentage on full cost for this product is
Requirement 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. (Round intermediary calculations to the nearest whole dollar and then round the new selling price to the nearest cent.)
%.
Data table
%.
The new selling price is
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 15% fewer units
being sold compared to before the change. Calculate operating income (loss). (Enter operating losses with a minus sign or parentheses.)
Operating income (lass)
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
ⒸA. The CEO has not considered customers in these pricing decisions. The concem the CEO must ask is "Will customers continue to want the product at these prices?".
OB. The CEO has not considered inflation in manufacturing supply prices. The concern the CEO must ask is "Will they be forced to raise prices due to inflation but competitors not raise prices?".
OC. The CEO has not considered outsourcing manufacturing work to decrease wages. The concern the CEO must ask is "Will outsourcing manufacturing cause the work to be lower quality?".
OD. 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?".
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
Print
C
?
500,000 units
?
$ 195,000
$ 2,000,000
$
3.75
$ 3,000,000
Done
X
Transcribed Image Text:The new chief executive officer (CEO) of Richard 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 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. (a) The total sales revenue is (Round your answer to the nearest cent.) (b) The selling price per unit is (Round the retum on investment to the nearest whole percent, X%.) (c) The rate of return on investment is (d) Calculate the markup percentage on full cost for this product. (Round your intermediary calculations to the nearest cent and the markup to the nearest hundredth percent XXX%) The markup percentage on full cost for this product is Requirement 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. (Round intermediary calculations to the nearest whole dollar and then round the new selling price to the nearest cent.) %. Data table %. The new selling price is 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 15% fewer units being sold compared to before the change. Calculate operating income (loss). (Enter operating losses with a minus sign or parentheses.) Operating income (lass) 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 ⒸA. The CEO has not considered customers in these pricing decisions. The concem the CEO must ask is "Will customers continue to want the product at these prices?". OB. The CEO has not considered inflation in manufacturing supply prices. The concern the CEO must ask is "Will they be forced to raise prices due to inflation but competitors not raise prices?". OC. The CEO has not considered outsourcing manufacturing work to decrease wages. The concern the CEO must ask is "Will outsourcing manufacturing cause the work to be lower quality?". OD. 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?". 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 Print C ? 500,000 units ? $ 195,000 $ 2,000,000 $ 3.75 $ 3,000,000 Done X
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