Gildea Builders builds $1,500-$square$-$foot starter tract homes in the fast$-$growing suburbs of Seattle. 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. Gildea Builders' cost per developed sublot are as follows:

$($Click the icon to view the costs.$)$

Gildea 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 $$208,000$ each.

Read the requirements.

Requirement $1.$ Which approach to pricing should Gildea Builders emphasize? Why?

Gildea will need to emphasize a target$-$costing approach to pricing. Because the tract homes are not unique and face stiff competition, Gildea will control over pricing.

Requirement $2.$ Will Gildea Builders be able to achieve its target profit levels? Show your computations.

Complete the following table to show whether Gildea Builders will be able to achieve their target profit levels. $($Use parentheses or a minus sign to indicate a profit shortfall.$)$

Less:

Target enst ner home

Less:

Expected excess profit $($profit shortfall$)$

arget protit levels. $($Use parentheses or a minus sign to indicate a profit shortfall.$)$

Data table

$\backslash$table$[[$Land $....,55,000],[$Construction$,124,000],[$Landscaping $...,5,000],[$Variable markoting costs $...,2,000]]$

Print

Done