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Floro Corporation operates a commercial nursery where it propagates plants for garden centers throughout the region. Floro has $15,000,000 in assets. Its yearly fixed
Floro Corporation operates a commercial nursery where it propagates plants for garden centers throughout the region. Floro has $15,000,000 in assets. Its yearly fixed costs are $2,000,000 and the variable costs for the potting soil, container, label, seedling, and labor for each gallon size plant total $3.00. Floro's volume is currently 1,000,000 units. Floro offers the plants to garden centers for $7.50 each. Garden centers then mark them up to sell to the public for $15 to $20, depending on the type of plant. Required: a) Floro's owners want to earn a 18% return on the company's assets. What is Floro's target profit? b) Given Floro's current costs, will its owners be able to achieve their target profit? c) If the target profit is not met, what are possible actions for Floro to take?
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