Bennett Builders would like to earn a profit of 16% of the variable cost of each home sold. Similar homes offered by competing builders sell for $205,000 each. Assume the company has no fixed costs. Bennett 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 fierce. The homes are a standard model, with any upgrades added by the buyer after the sale. Bennett Builders's costs per developed sublot are as follows: (Click the icon to view the costs.) Read the requirements. approach to pricing because they are This means Bennett will control over pricing because the tract homes are v stiff Bennett Builders will need to emphasize a competition. Requirement 2. Will Bennett Builders be able to achieve its target profit levels? Begin by calculating the target cost. Market price of similiar homes Less: Desired profit Target full cost per home to achieve its desired profit. Given the current market price and Bennett's current variable costs, the company will The company's profit will the target by $ per home sale. Requirement 3. Bathrooms and kitchens are typically the most important selling features of a home. Bennett Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $25,000 per home but would enable Bennett Builders to increase the sales prices by $43,750 per home. (Kitchen and bathroom upgrades typically add about 175% of their cost to the value of any home.) If Bennett Builders makes the upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this manner? Calculate the new cost-plus price per home. Current variable cost per home Plus: Variable cost of kitchen and bathroom upgrade per home Total variable cost per home Plus: Desired profit per home Cost-plus price per home Choose from any list or enter any number in the input fields and then continue to the next question. Should the company differentiate its product in this manner? The new cost-plus price per home, with bath and kitchen upgrades, is actually $248,750, as expected, he will earn his desired profit. Bennett the expected market price of an upgraded house. If Bennett can sell the upgraded homes for V upgrade the bathrooms and kitchens so that he has control over pricing. X Data Table $ 59,000 122,000 Land Construction Landscaping Variable selling costs 3,000 1,000 Print Done Bennett Builders would like to earn a profit of 16% of the variable cost of each home sold. Similar homes offered by competing builders sell for $205,000 each. Assume the company has no fixed costs. Bennett 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 fierce. The homes are a standard model, with any upgrades added by the buyer after the sale. Bennett Builders's costs per developed sublot are as follows: (Click the icon to view the costs.) Read the requirements. approach to pricing because they are This means Bennett will control over pricing because the tract homes are v stiff Bennett Builders will need to emphasize a competition. Requirement 2. Will Bennett Builders be able to achieve its target profit levels? Begin by calculating the target cost. Market price of similiar homes Less: Desired profit Target full cost per home to achieve its desired profit. Given the current market price and Bennett's current variable costs, the company will The company's profit will the target by $ per home sale. Requirement 3. Bathrooms and kitchens are typically the most important selling features of a home. Bennett Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $25,000 per home but would enable Bennett Builders to increase the sales prices by $43,750 per home. (Kitchen and bathroom upgrades typically add about 175% of their cost to the value of any home.) If Bennett Builders makes the upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this manner? Calculate the new cost-plus price per home. Current variable cost per home Plus: Variable cost of kitchen and bathroom upgrade per home Total variable cost per home Plus: Desired profit per home Cost-plus price per home Choose from any list or enter any number in the input fields and then continue to the next question. Should the company differentiate its product in this manner? The new cost-plus price per home, with bath and kitchen upgrades, is actually $248,750, as expected, he will earn his desired profit. Bennett the expected market price of an upgraded house. If Bennett can sell the upgraded homes for V upgrade the bathrooms and kitchens so that he has control over pricing. X Data Table $ 59,000 122,000 Land Construction Landscaping Variable selling costs 3,000 1,000 Print Done