MAKING PRICING STRATEGY: all data needed will be given in

the Pricing Worksheet. Total Assets $=395,681\mathrm{.}00$

Clara, in her garden shop, has been growing plants from seedlings

to one$-$gallon containers. Her fixed cost and variable costs per plant

has gone up and she is trying to figure out if see can sell the one$-$

gallon grown plants at the price she desires. Fixed Garden Center

Costs related to growing containers of plants is $$12,000$ and the

Variable Cost $ associated with the one$-$gallon plants are $$1\mathrm{.}25.$

Currently the volume of contains sold are $10,000$ one gallon

containers a year. Competitors in her region also sell a similar one$-$

gallon containers of plants with an average selling price of $$7\mathrm{.}50.$

$($Must decide whether you use the Price Setter $($Cost $+)$ or Price

Taker $($Target Pricing$)$ Method of calculation below.$)$

REQUIREMENTS:

Clara desires a $10\%$ return on her total assets at the end of

This being the case what should Full Product Costs be

based on the Formula for Full Product Cost to meet the

return?

Given Clara's current costs, will she be able to achieve her

target profit? If yes, why$/$how and if no$,$ why and give

suggestions to help improve the results. If not, based on the

region she sells in$,$ can she have the ability to increase here

selling $ per container? If yes, why, and if no$,$ why not.

What else might she change so Actual Product Costs would

give her a difference of $\text{'}0\text{'}$ or greater from Target Product

Cost? $($Give one change and then prove it in your worksheet

for Requirement $3.)$

Assume Clara has identified ways to cut is variable costs to

$$1\mathrm{.}15$ per container. What would be the new maximum Actual

Product Costs be based on the original calculations and not

your Requirement $3$ calculations.? If Reqs. $1$ & $2$ did not allow

for Clara to achieve $10\%$ desired return on her assets at the

end of $2024,$ will this decrease in the Variable Costs now allow

here to reach her desired return & why?

If$,$ in the region Clara sells in currently, what would she need

to do to increase the selling $ per and why? $($Give a minimum

of $2$ suggestions.$)$