3. Green Gardener operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Green Gardener has $5,250,000 in assets. Its yearly fixed costs are $625, Print the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $1.70. Green Gardener's volume is currently 470,000 units. Competitors offer the same plants, at the same quality, to garden centers for $4.00 each. Garden centers then mark them up to sell to the public for $9 to $12, depending on the type of plant. Read the requirements. Requirement 1. Green Gardener's owners want to earn a 10% return on investment on the company's assets. What is Green Gardener's target full product cost? (1) Less: (2) Target full product cost Requirement 2. Given Green Gardener's current costs, will its owners be able to achieve their target profit? Begin by calculating Green Gardener's current full product cost. (3) Plus: (4) Current full product cost Green Gardener's current full product costs are (5) its target full product cost, therefore Green Gardener (6) be able to acheive its target profit. Requirement 3. Assume Green Gardener has identified ways to cut its variable costs to $1.55 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit? Begin by calculating Green Gardener's new target fixed cost. (7) Less: (8) Target fixed cost Will this decrease in variable costs allow the company to achieve its target profit? Since the company's actual fixed costs are (9) cost cutting measures. the new target fixed cost amount, Green Gardener (10) be able to achieve its target profit without having to take any other Requirement 4. Green Gardener started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Green Gardener does not expect volume to be affected, but it hopes to gain more control over pricing. If Green Gardener has to spend $80,000 this year to advertise and its variable costs continue to be $1.55 per unit, what will its cost-plus price be? Do you think Green Gardener will be able to sell its plants to garden centers at the cost-plus price? Why or why not? Begin by calculating the cost-plus price per unit. (Round your answer to the nearest cent.) (11) Plus: (12) Full product cost Plus: (13) Target revenue Divided by: (14) Cost-plus price per unit Do you think Green Gardener will be able to sell its plants to garden centers at the cost-plus price? Why or why not? If the advertising campaign is effective, Green Gardener (15) previously charged. be able to sell its plants to garden centers at this price because it is (16) than the $4.00 that Green Gardener
