Costs

Requirements

Which approach to pricing should Rolling Builders emphasize? Why?

Will Rolling Builders be able to achieve its target profit levels?

Bathrooms and kitchens are typically the most important selling features of a home.

Rolling Builders could differentiate the homes by upgrading the bathrooms and kitchens. The

upgrades would cost $$24,000$ per home but would enable Rolling Builders to increase the sales

prices by $$42,000$ 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?