Cost-plus price: It is a pricing method which uses the cost to determine the price of the product. To determine: 1. The Snappy Plant’s target full product cost 2. With Snappy Plant’s current costs will its owners be able to achieve their target profit. 3. The new target fixed cost with decrease in variable cost to $1.75 and will this decrease in variable costs allow the company to achieve its target profit. 4. With the $105,000 this year advertising and its variable cost continue to be $1.75 per unit, what will its cost-plus- price be? Do you think Snappy Plants will be able to sell its plants to garden centers at the cost-plus price? Why or why not?

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Chapter 25, Problem P25.22APGA

To determine

Cost-plus price:

It is a pricing method which uses the cost to determine the price of the product.

To determine:

1. The Snappy Plant’s target full product cost

2. With Snappy Plant’s current costs will its owners be able to achieve their target profit.

3. The new target fixed cost with decrease in variable cost to $1.75 and will this decrease in variable costs allow the company to achieve its target profit.

4. With the $105,000 this year advertising and its variable cost continue to be $1.75 per unit, what will its cost-plus- price be? Do you think Snappy Plants will be able to sell its plants to garden centers at the cost-plus price? Why or why not?

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