Jordan Corporation operates a commercial nursery where it propagates plants for garden centers throughout the region. Jordan has $5,000,000 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. Jordans volume is currently 500,000 units. Jordan offers the plants to garden centers for $4.00 each. Garden centers then mark them up to sell to the public for $8 to $10, depending on the type of plant.

Required:

a) Jordans owners want to earn a 12% return on the companys assets. What is Jordans target profit?

b) Given Jordans 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 Jordan to take?