Builders builds$1,500-$square$-$foot starter tract homes in the$$ fast$-$growing suburbs of

AtlantaAtlanta.

Land and labor are$$ inexpensive, and competition among developers is fierce. The homes are$$ "cookie$-$cutter," with any upgrades added by the buyer after the sale.

RouseRouse

$$Builders$\text{'}$ costs per developed sublot are as$$ follows:

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RouseRouse

Builders would like to earn a profit of

$1414\%$

of the variable cost of each home sale. Similar homes offered by competing builders sell for

$ $204$ comma $000$$$204,000$

each.

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Question content area bottom

Part $1$

Requirement $1.$ Which approach to pricing should

RouseRouse

Builders$$ emphasize? Why?

RouseRouse

will need to emphasize a

$$

$$

cost$-$plus

target$-$costing

approach to pricing. Because the tract homes are

$$

$$

not unique and face

unique and do not face

stiff$$ competition,

RouseRouse

will

$$

$$

have a lot of

not have much

control over pricing.