ameworlC E25-12 Making pricing decisions Johnson Builders builds 1,500-square-foot starter tract homes in the tast-growieg suburbs of Atlanta. Land and labor are cheap, and competition ameng developes is fierce. The homes are a standard model, with any upgrades added by the bayer after the sale. Johnson Builders's costs per developed sublot are as follows Land s 50,000 123,000 9,000 8,000 Landscaping Variable selling costs Johnson Builders would like to earn a home sold. Similar homes offered by competing builders sell for $207 Assume the company has no fixed costs. profit of 14% of the variable cost of each ,000 each. Requirements 1. Which approach to pricing should Johnson Builders emphasize? Why? 2. Will Johnson Builders be able to achieve its target prot levels? 3. Bathrooms and kitchens are typically the most important selling features of a home. Johnson Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $16,000 per home but would enable Johnson Builders to increase the sales prices by $28,000 per home. (Kitchen and bathroom upgrades typically add about 175% of their cost to the value of any home.) If Johnson Builders makes the upgrades, what will the new cost-plus price per home bel Should the company differentiate its product in this manner