Answer 1
Sale Revenue @ 3.50 per unit | 1750000 |
Less: Target Return | 600000 |
Target Full Cost | 1150000 |
Answer 2
Variable Cost @ 1.25 per unit | 625000 |
Add: Fixed Cost | 600000 |
Total Full Cost | 1225000 |
Garden Away's Current total full cost of $1225000 is higher that its target full cost. Garden away does not meet the owner's profit expectations.
Answer 3
Taget Full Cost | 1150000 |
Less: Reduced Level of Fixed Cost @ 1.10 per unit | 550000 |
New Target Fixed Cost | 600000 |
The new target fixed cost is $600000. By reducing variable cost to $1.10, Garden away is able to achieve its target profit without having to take any other cost cutting measures.
Answer 4
Variable Cost @ 1.10 | 550000 |
Fixed Cost | 600000 |
Additional Advertising Expense | 100000 |
Total Cost | 1250000 |
Target Return | 600000 |
Target Revenue | 1850000 |
Divided By:Number of Units to be sold | 500000 |
Cost plus price per unit | 3.7 |
A Requirements 1. Garden Away owners want to earn a 12% return on the company's assets....
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