Jordan Corporation operates a commercial nursery where itpropagates plants for garden centers throughout the region. Jordanhas $5,000,000 in assets. Its yearly fixed costs are $625,000 andthe variable costs for the potting soil, container, label,seedling, and labor for each gallon size plant total $1.70.Jordanâs volume is currently 500,000 units. Jordan offers theplants to garden centers for $4.00 each. Garden centers then markthem up to sell to the public for $8 to $10, depending on the typeof plant.
Required:
a) Jordanâs owners want to earn a 12% return on the companyâsassets. What is Jordanâs target profit?
b) Given Jordanâs current costs, will its owners be able toachieve their target profit?
c) If the target profit is not met, what are possible actionsfor Jordan to take?
Jordan Corporation operates a commercial nursery where itpropagates plants for garden centers throughout the region. Jordanhas $5,000,000 in assets. Its yearly fixed costs are $625,000 andthe variable costs for the potting soil, container, label,seedling, and labor for each gallon size plant total $1.70.Jordanâs volume is currently 500,000 units. Jordan offers theplants to garden centers for $4.00 each. Garden centers then markthem up to sell to the public for $8 to $10, depending on the typeof plant.
Required:
a) Jordanâs owners want to earn a 12% return on the companyâsassets. What is Jordanâs target profit?
b) Given Jordanâs current costs, will its owners be able toachieve their target profit?
c) If the target profit is not met, what are possible actionsfor Jordan to take?
