Please answer the Requirements 2 and 3 according to the form (The numbers are not the same). Please make sure your answer is correct. Thanksss
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 fierce. The homes are a standard model, with any upgrades added by the buyer after the sale. Rolling Builders' costs per developed sublot are as follows: (Click the icon to view the costs.) Rolling Builders would like to earn a profit of 14% of the variable cost of each home sold. Similar homes offered by competing builders sell for $206,000 each. Assume the company has no fixed costs. Read the requirements. Requirements Data table Land $ 55,000 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. Rolling Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $30,000 per home but would enable Rolling Builders to increase the sales prices by $52,500 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? Construction 124,000 5,000 Landscaping Variable selling costs 9,000 Print Done Print Done Requirement 2. Will Bennett Builders be able to achieve its target profit levels? Begin by calculating the target cost. Market price of similiar homes 208,000 Less: Desired profit 30,080 $ 177,920 Target full cost per home Given the current market price and Bennett's current variable costs, the company will not be able to achieve its desired profit. The company's profit will fall short of the target by $ 10,080 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 $30,000 per home but would enable Bennett Builders to increase the sales prices by $52,500 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 $ 188,000 30,000 Plus: Variable cost of kitchen and bathroom upgrade per home Total variable cost per home $ 218,000 34,880 Plus: Desired profit per home $ 252,880 Cost-plus price per home Should the company differentiate its product in this manner
