Question
Exotic Roses owned by Margarita Rameriz provides a variety of rose bushes to local nurseries that sell Rameriz' roses to the end consumer (landscapers and
Exotic Roses owned by Margarita Rameriz provides a variety of rose bushes to local nurseries that sell | |||||||
Rameriz' roses to the end consumer (landscapers and retail customers). Rameriz grows the roses from | |||||||
cuttings that she has specifically cultivated for their unusual characteristics (color, size, heartiness and | |||||||
resistance to disease). | |||||||
Margarita's roses are in great demand as evidence by the wholse price she charges, $15 per potted plant. | |||||||
Exotic Roses has the following cost structure: | |||||||
Fixed Costs per year | Unit Variable Costs | ||||||
Plant Materials | $ 0.50 | ||||||
Pot | $ 0.30 | ||||||
Labor | $ 8,000.00 | $ 0.70 | |||||
Utilities | $ 9,000.00 | ||||||
Rent | $ 7,500.00 | ||||||
Other | $ 2,500.00 |
| |||||
a. How many potted rose plants must Exotic Roses sell to break-even? | |||||||
b. If Rameriz wants to make operating profits of $10,000, how many potted rose plants must be sold? | |||||||
c. If Rameriz wants to make an AFTER-TAX profit of $10,000, how many potted rose plants must be sold? | |||||||
The tax rate is 35%. | |||||||
Hint: After-tax profit / (1 - tax rate) = Operating Profit |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started