Garden House operates a commercial plant nursery where it propagates plants for garden centers throughout the region, Garden House has $5,300,000 in assets. Its yearly fixed costs are $625,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $1.70. Garden House's volume is currently 510,000 units. Competitors offer the same plants, at the same quality, to garden centers for $4.00 sach. 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 2. Given Garden House's current costs, will its owners be able to achieve their target profit? Begin by calculating Garden House's current full product cost. Current variable costs Plus: Current fixed costs Current full product cost Garden House's current full product costs are higher than its target full product coat, therefore Garden House will not be able to acheive its target profit. Requirement 3. Assume Garden House 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 Garden House's new target fixed cost. Target full product cost 1510000 Less: Variable costs 790500 Target fixed cost 719500 Will this decrease in variable costs allow the company to achieve its target profit? Since the company's actual fixed costs are less than or equal to the new target fixed cost amount, Garden House will be able to achieve its target profit without having to take any other cost cutting measures Requirement 4. Garden House started an aggressive advertising campaign strategy to differentiate its plants from those growri by other nurseries. Garder House does not expect volume to be affected, but it hopes to gain more control over pricing. If Garden House has to spend $105,000 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 Garden House 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.) Current variable costs Requirement 4. Garden House started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Garden House does not expect volume to be affected, but it hopes to gain more control over pricing. If Garden House has to spend $105,000 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 Garden House 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.) Current variable costs Plus: Fixed costs Full product cost Plus: Desired profit TITUTE Target revenue Divided by: Number of units Cost-plus price per unit Garden House operates a commercial plant nursery where it propagates plants for garden centers throughout the region, Garden House has $5,300,000 in assets. Its yearly fixed costs are $625,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $1.70. Garden House's volume is currently 510,000 units. Competitors offer the same plants, at the same quality, to garden centers for $4.00 sach. 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 2. Given Garden House's current costs, will its owners be able to achieve their target profit? Begin by calculating Garden House's current full product cost. Current variable costs Plus: Current fixed costs Current full product cost Garden House's current full product costs are higher than its target full product coat, therefore Garden House will not be able to acheive its target profit. Requirement 3. Assume Garden House 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 Garden House's new target fixed cost. Target full product cost 1510000 Less: Variable costs 790500 Target fixed cost 719500 Will this decrease in variable costs allow the company to achieve its target profit? Since the company's actual fixed costs are less than or equal to the new target fixed cost amount, Garden House will be able to achieve its target profit without having to take any other cost cutting measures Requirement 4. Garden House started an aggressive advertising campaign strategy to differentiate its plants from those growri by other nurseries. Garder House does not expect volume to be affected, but it hopes to gain more control over pricing. If Garden House has to spend $105,000 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 Garden House 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.) Current variable costs Requirement 4. Garden House started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Garden House does not expect volume to be affected, but it hopes to gain more control over pricing. If Garden House has to spend $105,000 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 Garden House 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.) Current variable costs Plus: Fixed costs Full product cost Plus: Desired profit TITUTE Target revenue Divided by: Number of units Cost-plus price per unit
