Garden Center operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Garden Center has $5,000,000 in assets. Its yearly fixed costs are $600,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $1.25. Garden Center's volume is currently 470,000 units. Competitors offer the same plants, at the same quality, to garden centers for $3.50 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. Garden Center's owners want to earn a 10% return on investment on the company's assets. What is Garden Center's target full product cost? Sele New Less: Target full product cost Requirement 2. Given Garden Center's current costs, will its owners be able to achieve their target profit? Begin by calculating Garden Center's current full product cost. Plus: Current full product cost Garden Center's current full product costs are its target full product cost, therefore Garden Center be able to acheive its target profit. Requirement 3. Assume Garden Center has identified ways to cut its variable costs to $1.10 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 Garden Center's new target fixed cost. Less: 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 the new target fixed cost amount, Garden Center be able to achieve its target profit without having to take any other cost cutting measures. Requirement 4. Garden Center started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Garden Center does not expect volume to be affected, but it hopes to gain more control over pricing. If Garden Center has to spend $125,000 this year to advertise and its variable costs continue to be $1.10 per unit, what will its cost-plus price be? Do you think Garden Center 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.) Plus: Full product cost Plus: Target revenue Divided by: Cost-plus price per unit Do you think Garden Center 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, Garden Center be able to sell its plants to garden centers at this price because it is than the $3.50 that Garden Center previously charged. 1. Garden Center's owners want to earn a 10% return on investment on the company's assets. What is Garden Center's target full product cost? 2. Given Garden Center's current costs, will its owners be able to achieve their target profit? 3. Assume Garden Center has identified ways to cut its variable costs to $1.10 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit? 4. Garden Center started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Garden Center does not expect volume to be affected, but it hopes to gain more control over pricing. If Garden Center has to spend $125,000 this year to advertise and its variable costs continue to be $1.10 per unit, what will its cost-plus price be? Do you think Garden Center will be able to sell its plants to garden centers at the cost-plus price? Why or why not