myMDC -JOR.. ACG2071 REF 11366 THURSDAY 11/14/172:25 PM Homework: Chapter 10 Lab
ID: 2571587 • Letter: M
Question
myMDC -JOR.. ACG2071 REF 11366 THURSDAY 11/14/172:25 PM Homework: Chapter 10 Lab Score: 0 of 1 pt X P8-49B (similar to) HW Score: 0%, 0 of 1 pt Question Help * al plant nursery where it propagates plants for garden centers throughout the region. GreenThumb has $6 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. GreenThumb's volume is currently 600,000 units Competitors offer the same quality plants to garden centers for $3.90 each. Garden centers then mark them up to sell to the public for $8 to $11, depending on the type of plant. Requirement 1, GreenThumb owners want to earn a 14% return on the company's assets. What is GreenThumb's target full cost? Calculate the target full cost for Green Thumb. Select the formula labels and enter the amounts. Choose from any list or enter any number in the input fields and then click Check Answer 6 parts Clear AllExplanation / Answer
1.
2. Calculation of Green thumbs current cost per unit -
Sales price could not be more than 3.90
Return = (3.90-3.42)*600000/6000000
= 290000/6000000
= 4.83% which is less than desired return on assets which is 14%
No, Green thumbs will not be able to achieve their target profit.
3. First of all we should need to calculate the per unit Current fixed and variable cost .
Now variable cost reduced to $ 1 per unit .
Target selling price per unit could not be more than 3.90.
margin would be 1.40
then the target fixed cost = sales price - margin - variable cost
= 3.90 - 1.40 - 1
= 1.5*600000
= 900000 which is as same as current.
4. Cost plue price = variable cost + fixed cost + extra advertisment + required margin
cost plus price = 1 + 1.5 + (72000/600000) + 1.40
= 2.5 + 0.12 + 1.40
= 4.02
if its product is really better than other nurseries product and his advertisment will be successfull in terms of what he want to say about the specialit of the plant and people understand it only yhen he will be able to sell his plant other wise he can t be able to sell his plant at this price of 4.02.
Please note all values are in $.
In case of further clarification required please comment.
Particulars Amt $ Target sales price (600000*3.90) 2340000 Less Margin (14%*6000000) 840000 Target Full cost Should be (Target sales price - Margin) 1500000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.