Question

Nature Place operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Nature Place has $6 million in assets. Its yearly fixed costs are $900,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-sized plant total $1.15. Nature Place's volume is currently 600,000 units. Competitors offer the same quality plants to garden centers for $3.90 each. Garden centers then mark them up to sell to the public for $9 to $11, depending on the type of plant. hts Read the tequirements. Requirement 1. Nature Place owners want to eam a 14% return on the company's assets. What is Nature Place's target full cost? ve Calculate the target full cost for Nature Place. Select the formula labels and enter the amounts. Less: Target full cost

Answer 1

Nature Place
1.Revenue 600,000*3.90	2,340,000
Less: Desired Profit 6,000,000*14%	840,000
Target full cost	1,500,000
2.Fixed costs	900,000
Variable costs	690,000
Total full cost	1,590,000
Higher than target cost
Target Full cost	1,500,000
Less: Reduced variable cost	600,000
New target fixed costs	900,000
Will be able to achieve
4.Variable cost	600,000
Fixed costs	900,000
Advertising cost	72,000
Total cost	1,572,000
Plus: Desired Profit	840,000
Target Revenue	2,412,000
Divided by Number of units	600,000
Cost plus price	4.02
If the campaign is successful, otherwise a expensive