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Riki Corporation operates a commercial nursery where it propagates plants for garden centers throughout the...

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Accounting

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

  1. Rikis owners want to earn a 15% return on the companys assets. What is Lowrys target profit?
  2. Given Rikis current costs, will its owners be able to achieve their target profit?
  3. If the target profit is not met, what are possible actions for Riki to take?

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