$10-12$ Making pricing decisions

$1)$ Which approach to pricing should Sufyan Builders emphasize? Why? $2)$ Will Sufyan Builders be able to achieve its target profit levels? Relevant variable costs: $$ Land $$$$59,000$ Construction $$$$124,000$ Land Scaping $$$$6,000$ Variable Selling Cost $$$$5,000$ Total relevant variable costs $$$$194,000$ Revenue per home $$$$221,160$ Less: desired profit $(14\%$ x Variable cost$/$home$)$$$27,160$ Target full product cost $$$$194,0003)$ Bathrooms and kitchens are typically the most important selling features of a home. Sufyan Builders could differentiate the homes by upgrading the bathrooms and kitchens.$$ The upgrades would cost $$22,000$ per home but would enable Sufyan Builders to increase the sales prices by $$38,500$ per home. $($Kitchen and bathroom upgrades typically add about $175\%$ of their cost to the value of any home.$)$ If Sufyan Builders makes the upgrades, what will the new cost$-$plus price per home be$?$ Should the company differentiate its product in this manner? Upgraded Var costs$/$home $($original $+$ upgrades$)$$$216,000$ Plus: Fixed costs $$ Full Product Cost $$$$216,000$ Plus: Desired profit $(14\%$ x upgraded variable cost$/$home$)$ Cost$-$plus price$/$home $$$$216,000$ Upgraded home selling price: $($original cost $+$ upgrades$)$$$216,000$