Smith Builders builds 1,500-square-foot starter tract homes in the fast-growing suburbs of Miami Land and labor are cheap, and competition among developers is fierce. The homes are "cookie-cutter," with any upgrades added by the buyer after the sale. Smith Builders' cost per developed sublot are as follows: (Click the icon to view the costs) Smith Builders would like to earn a profit of 15% of the variable cost of each home sale Similar homes offered by competing builders sell for $207,000 each. Read the requirements Complete the following table to show whether Smith Builders will be able to achieve their target profit levels. (Use parentheses or a minus sign to indicate a profit shortfal Revenue at market price 207,000 Less: Desired profit 28.050 Target cost per home $ 178,950 Less Expected excess profit (profit shortfall) Actual current variable cost 187,000 S (8,050) Given the current market price and Smith Builder's current variable costs, the company will its target profit. Its profit will fall short by $ 8.050 per home sale not be able to to achieve Requirement 3. Bathrooms and kitchens are typically the most important seling features of a home. Smith Builders could differentiate the homes by upgrading bathrooms and kitchens. The upgrades would cost $30,000 per home but would enable the company to increase the selling prices by $52,500 per home (in general, kitchen and bathroom upgrades typically add at least 150% of their cost to the value of any home.) If Smith Builders upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this manner? Show your analysis Compute the new cost-plus price per home. Plus Total variable costs Plus Cost-plus price Data table Land Construction $ 58,000 $ 120,000 Landscaping EA $ 8,000 Variable marketing costs $ 1,000 Print Done a -> Requirements 1. Which approach to pricing should Smith Builders emphasize? Why? 2. Will Smith Builders be able to achieve its target profit levels? Show your computations. 3. Bathrooms and kitchens are typically the most important selling features of a home. Smith Builders could differentiate the homes by upgrading bathrooms and kitchens. The upgrades would cost $30,000 per home but would enable the company to increase the selling prices by $52,500 per home (in general, kitchen and bathroom upgrades typically add at least 150% of their cost to the value of any home.) If Smith Builders upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this manner? Show your analysis. Print Done