Drop down options:

Requirement 1:

1. cost-plus or target-costing

2. price-setters or price-takers

3. have significant or not have much

4. not unique and face or unique and do not face

Requirement 2:

1. be able or not be able

2. exceed or fall short of

Requirement 3:

1. equal to, higher than, or lower than

2. equal to, less than, or more than

3. should or should not

4. equal, less, or more

Rouse Builders builds 1,500-square-foot starter tract homes in the Rouse Builders would like to earn a profit of 14% of the variable fast-growing suburbs of Atlanta. Land and labor are cheap, and cost of each home sold. Similar homes offered by competing competition among developers is fierce. The homes are a builders sell for $209,000 each. Assume the company has no standard model, with any upgrades added by the buyer after the fixed costs. sale. Rouse Builders's costs per developed sublot are as follows: E: (Click the icon to view the costs.) Read the requirements. i Data Table $ 55,000 120,000 Land Construction Landscaping Variable selling costs 8,000 9,000 Requirement 1. Which approach to pricing should Rouse Builders emphasize? Why? This means Rouse stiff competition. Rouse Builders will need to emphasize a approach to pricing because they are will control over pricing because the tract homes are Requirement 2. Will Rouse 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 Given the current market price and Rouse's current variable costs, the company will The company's profit will the target by $ to achieve its desired profit. per home sale. Requirement 3. Bathrooms and kitchens are typically the most important selling features of a home. Rouse Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $24,000 per home but would enable Rouse 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 Rouse 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 Should the company differentiate its product in this manner? The new cost-plus price per home, with bath and kitchen upgrades, is actually house. If Rouse can sell the upgraded homes for $251,000, as expected, he will earn upgrade the bathrooms and kitchens so that he has y control over pricing. the expected market price of an upgraded y his desired profit. Rouse