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 wholesale 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
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: Plant Materials Pot Labor Utilities Rent Other Fixed Costs per year Unit Variable Costs $ 0.50 $ 0.30 $ 8,000.00 $ 0.70 $ 9,000.00 $ 7,500.00 $ 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 ProfitStep 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