Do Homework - JORGE CASTRO ACG2071 REF 11366 THURSDAY JORGE CASTRO 11/12/17 11:4

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Do Homework - JORGE CASTRO ACG2071 REF 11366 THURSDAY JORGE CASTRO 11/12/17 11:40 AM Homework: Chapter 10 Lab Score: 0.41 of 1 pt 1 of 1 (1 complete) Hw Score: 41.18%, 0.41 of 1 pt & P8-49B (similar to) Help Nature Place yearly fixed costs are $600.500, and the variable costs for the potting soil, container, la volume is currently 475,000 units. Competitors offer the same quality plants to garden centers for $3.60 each. Garden centers then mark them up to sell to the public a commercial plant nursery where it propagates plants for garden centers throughout the region. Nature Place has $6.2 million in assets. Its bel, seedling, and labor for each gallon-sized plant total $1.05. Nature Place's for $8 to $9, depending on the type of plant. having Requirement 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 $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 Place 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-plus price to the nearest cent.) 427500 114000 Choose from any list or enter any number in the input fields and then click Check Answer. Clear All part remaining

Explanation / Answer

Part 1 calculation of target full cost

Target costing is an approach in which cost is determined taking the base of competitive market price and then subtracting the desired profit.

Part 2 - Analysis of achieving target cost

Part 3 Analysis of achieving target fixed cost

Part 4 - Analysis of selling the plants at cost plus price

If such advertising campaign is started then cost plus price is $3.84.

Nature place should be able to sell its plants at this price since it is not significantly higher than $3.6

Particulars Amount Revenue at Market price (475000 * $3.6) $1710000 Desired profit ($6.2 million * 11%) $682000 Target full cost $1028000

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