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Nature's House operates a commercial plant nursery where it propagates plants for garden centres throughout the region. Nature's House has $6.2 million in assets. Its

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Nature's House operates a commercial plant nursery where it propagates plants for garden centres throughout the region. Nature's House has $6.2 million in assets. Its yearly fixed costs are $600,500, and the variable costs for the potting soil, container, label, seedling, and labour for each plant total $1.05. Nature House's volume is currently 475,000 units. Competitors offer the same quality plants to garden centres for $3.60 each. Garden centres then mark them up to sell to the public for $8 to $10, depending on the type of plant. Requirements Taryo II VUOL Requirement 2. Given Nature's House's current costs, will its owners be able to achieve their target profit? Show your analysis. Calculate Nature's House's current total full cost. Select the formula labels and enter the amounts. Current variable costs Current fixed costs Total full cost Nature's House's current total full costs of $ is i ts target full cost. Nature's House meet the owner's profit expectations. Requirement 3. Assume that Nature's House has identified ways to cut its variable costs to $0.90 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. Calculate the new target fixed cost. Target full cost Less: Reduced level of variable costs New target fixed costs The new target fixed cost is V. By reducing variable costs to $0.90, Nature's House V be able to achieve its target profit without having to take any other cost cutting measures. Requirement 4. Nature's House started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Plant City made this strategy work, so Nature's House has decided to try it too. Nature's House doesn't expect volume to be affected, but it hopes to gain more control over pricing. If Nature's House has to spend $114,000 this year to advertise and its variable costs continue to be $0.90 per unit, what will its cost-plus price be? Do you think Nature's House will be able to sell its plants to garden centres at the cost-plus price? Why or why not? Determine its cost-plus price. (Round the cost-plus 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 if the marketing campaign is nursery Otherwise Nature's House may be considered a

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