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Riki Corporation operates a commercial nursery where it propagates plants for garden centers throughout the region. Ricki has $10,000,000 in assets. Its yearly fixed costs
Riki Corporation operates a commercial nursery where it propagates plants for garden centers throughout the region. Ricki has $10,000,000 in assets. Its yearly fixed costs are $1,000,000 and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $2.00. Rikis volume is currently 800,000 units. Riki's offers the plants to garden centers for $6.00 each. Garden centers then mark them up to sell to the public for $12 to $15, depending on the type of plant
- Rikis owners want to earn a 15% return on the companys assets. What is Lowrys target profit?
- Given Rikis current costs, will its owners be able to achieve their target profit?
- If the target profit is not met, what are possible actions for Riki to take?
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