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

SeattleSeattle.

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.

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

Builders would like to earn a profit of

$1616\%$

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

$ $202$ comma $000$$$202,000$

each

$1.$

Which approach to pricing should

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Builders$$ emphasize? Why?

$2.$

Will

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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.

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Builders could differentiate the homes by upgrading bathrooms and kitchens. The upgrades would cost

$ $22$ comma $000$$$22,000$

per home but would enable the company to increase the selling prices by

$ $38$ comma $500$$$38,500$

per home$($in general, kitchen and bathroom upgrades typically add at least$150\%$ of their cost to the value of any$$ home.$)$ If

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Builders$$ upgrades, what will the new$$ cost$-$plus price per home$$ be$?$ Should the company differentiate its product in this$$ manner? Show your analysis.