Nature Place operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Nature Place has 56 million in assets. Its yearly fixed costs are $900,000, and the variable costs for the potting soil container, label, seedling, and labor for each gallon-sized plant total $1.15. Nature Place's volume is currently 600.000 units. Competitors offer the same quality plants to garden centers for $3.99 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. Nature Place owners want to eam a 14% return on the company's assets. What is Nature Place's target il cost? Calculate the target full cost for Nature Place Select the formula labels and enter the amounts Less Target full cost Requirement 2. Given Nature Place's current costs will as owners be able to achieve their target prode? Show your analysis. Calculate Nature Place's current total full cost. Select the formula labels and enter the amounts. Total full cost Nature Place's current total full costs of es target fulcout. Nature Place meet the owner's profit expectations Requirement 3. Assume that Nature Place has identified ways to cut its variable costs to $1.00 per unt. What is a new target fixed cost? wa this decrease in variable costs allow the company to achieve its target profit? Show your analysis Target full cost Less: Reduced level of variable costs New target fixed costs The new target fixed cost is By reducing variable costs to $1.00, Nature Place be able to achieve its target profit without having to take any other cost cutting measures Requirement 4. Nature Place started an aggressive advertising carepaign strategy to differentiate its plants from these grown by other nurseries. Nature Place doesn't expect volume to be affected, but it hopes to gain more control over pricing Nature Place has to spend $72.000 this year to advertise and its variable costs continue to be $1.00 per unit, what will its cost plus price be? Do you think Nature Pace will be able to sell its plants to garden centers at the cost plus price? Why or why not? Determine its cost-plus price. (Round the cost pus price to the nearest cent) Plus: Plus: Target revenue Divided by Cost plus price per unit Consumers will be more willing to pay the cost-plus price in the marketing campaign is Otherwise Nature Place may be considered a nursery 0 Requirements X 1. Nature Place owners want to earn a 14% return on the company's assets. What is Nature Place's target full cost? 2. Given Nature Place's current costs, will its owners be able to achieve their target profit? Show your analysis. 3. Assume that Nature Place has identified ways to cut its variable costs to $1.00 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit? Show your analysis. 4. Nature Place started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Nature Place doesn't expect volume to be affected, but it hopes to gain more control over pricing. If Nature Place has to spend $72,000 this year to advertise and its variable costs continue to be $1.00 per unit, what will its cost-plus price be? Do you think Nature Place will be able to sell its plants to garden centers at the cost-plus price? Why or why not? Print Done Requirement 1. Nature Place owners want to earn a 14% return on the company's assets. What is Nature Place's targ Calculate the target full cost for Nature Place. Select the formula labels and enter the amounts. Current fixed costs Current variable costs Desired profit Revenue at current market price Total full cost osts, will its owners be able to achieve their target profit? Show your ar Select the formula labels and enter the amounts. Requirement 3. Assume that Nature Place has identified ways to cut its variable costs to $1.00 per unit. What is its ne variable costs allow the company to achieve its target profit? Show your analysis. Target full cost Less: Reduced level of variable costs New target fixed costs The new target fixed cost is By reducing variable costs to $1.00, Nature Place having to take any other cosi Requirement 4. Nature Plac less than actual fixed costs paign strategy to differentiate its plants from thos doesn't expect volume to be ol over pricing. If Nature Place has to spend $72, continue to be $1.00 per unit more than actual fixed costs I think Nature Place will be able to sell its plants to why not? the same as actual fixed costs Determine its cost-plus price. I u prve We caiest cent.) By reducing variable costs to $1.00, Nature Place be able to achieve its target profit without will ng campaign strategy to differentiate its plants from e control over pricing. If Nature Place has to spend Do you think Nature Place will be able to sell its pla other nurseries. Nature Place ar to advertise and its variable costs nters at the cost-plus price? Why or will not Otherwise Nature Place may be cc Consumers will be more willing to pay the cost-plus price if the marketing campaign is nursery. effective ineffective