Preston Builders builds 1,500-square-foot starter tract homes in the fast-growing suburbs of Atlanta. Land Preston Builders would like to earn a profit of 14% of the variable cost of each home sold. Similar homes and labor are cheap, and competition among developers is fierce. The homes are a standard model, with offered by competing builders sell for $206,000 each. Assume the company has no fixed costs. any upgrades added by the buyer after the sale. Preston Builders's costs per developed sublot are as follows: Read the requirements. (Click the icon to view the costs.) Market price of similiar homes Less: Desired profit Target full cost per home 206,000 26,740 $ 179,260 Given the current market price and Preston's current variable costs, the company will not be able to achieve its desired profit The company's profit ill fall short of 11,740 per home sale the target by S Requirement 3. Bathrooms and kitchens are typically the most important selling features of a home. Preston Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $22,000 per home but would enable Preston 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 Preston 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 3. Bathrooms and kitchens are typically the most important selling features of a home. Preston Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $22,000 per home but would enable Preston 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 Preston Builders makes the upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this manner? i Data Table Land Construction Landscaping Variable selling costs $ 58,000 120,000 12,000 1,000 Print Done