Question

Garden House operates a commercial plant nursery where it propagates plants for garden centers throughout the region Garden House has $3.5 million in assets. Its yearly fixed costs are $470,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-sized plant total $160. Garden House's volume is currently 500,000 units. Competitors offer the same quality plants to garden centers for $3.30 each Garden Centers then mark them up to sell to the public for $9 to $11, depending on the type of plant Read the requirements Requirement 1. Garden House owners want to earn a 13% return on the company's assets. What is Garden House's target full cost? Calculate the target full cost for Garden House. Select the formula labels and enter the amounts. Loss Target full cost

Answer 1

Sales 500,000*3.3	1650,000
Less: Desired Profit	455000
Target Full cost	1195000
Current Cost
Variable cost	800,000
Fixed cost	470,000
Total cost	1,270,000
Current cost is 75,000 more than target cost
does not meet expectations
Target full cost	1195000
Less: Reduced variable cost	725000
Target Fixed costs	470,000
Will be able to achieve
Variable costs	725000
Plus: Fixed costs	470,000
Advertising cost	40,000
Total cost	1235000
Plus: Desired profit	455000
Target revenue	1690,000
Number of units	500,000
Cost plus price per unit	3.38
Effective , expensive

Effective