BE25-12 (similar to) Rolling Builders builds 1,500-square-foot starter tract homes in the fast-growing suburbs of Atlanta. Land and labor are cheap, and competition among developers is force. The homes are a standard model, with any upgrades added by the buyer after the sale. Rolling Builder's costs per developed sublot are as follows: (Click the icon to view the costs.) Requirement 1. Which approach to pricing should Rolling Builders emphasize? Why? Roling Builders will need to emphasize a target-costing approach to pricing because they are price-takers. This means Roling will not have much control o Requirement 2. Will Roling Builders be able to achieve its target profit levels? Begin by calculating the target cost. Data Table Market price of similiar homes Less: Desired profit Target full cost per home Land $ 53,000 Construction 126,000 Landscaping 5,000 Variable selling costs 1,000 Print Done Requirements ag costs Print 1. Which approach to pricing should Rolling Builders emphasize? Why? 2. Will Rolling Builders be able to achieve its target profit levels? 3. Bathrooms and kitchens are typically the most important selling features of a home. Roling Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $22,000 per home but would enable Rolling Builders to increase the sales prices by $38,500 per home. (Kitchen and bathroom upgrades typically add about 175% of their cost to the value of any home.) If Rolling Builders makes the upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this manner? Print Done Question Help 16% of the variable cost of each home sold. Similar homes offered by competing builders sell for $203,000 each lot are Rolling Builders would like to earn a profit Assume the company has no fexed costs. Read the requirements th control over pricing because the tract homes are not unique and face stiff competition