Pricing of nursery plants (Learning Objective 2) Plants Galore operates a commercialplant nursery where it propagates plants f o rgarden centers throughout the region. Plants Galore has $5.8 million in assets. Its yearly fixed costs are $742,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-sized plant total $1.55. Plants Galore's volume is currently 575,000 units. Competitors offer the same quality plants to garden centers for $3.80 each. Garden centers then mark them up to sellto the public for $8 to $10, depending on the type of plant. Requirements 1. Plants Galore's owners want to earn a 11% return on the company's assets. What is Plants Galore's target full cost? 2. Given Plants Galore's current costs, will its owners be able to achieve their target profit? Show your analysis. 3. Assume that Plants Galore has identified ways to cut its variable costs to $1.40 per unit. What is its new target fixed cost? Will thisdecrease ni variablecosts allow the company to achieve its targetprofit? Show your analysis. 4. Plants Galore started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries. Plants Galore doesn't expect volume to be affected, but it hopesto gain more controlover pricing. If Plants Galore hasto spend $57,500 this year to advertiseand its variable costs continue to be $1.40 per unit, what will its cost-plus price be? Do you think Plants Galore will be able to sell its plants to garden centers at the cost-plus price? Why or why not?