take the sunglasses to explain whether his analysis 2015-12 Making Pricing decisions Rouse Builders builds 1,500-square-foot suburbs of Atlanta. Land and labor are cheap, and competition among devdopers is fire. The homes are a standard model, with any parades aded by the buyer after the sile. Rouse Builderss costs per developed subles are as follows: tract homes in the fast- Land Construction Landscaping Variable selling costs $ 51.000 121,000 5,000 4,000 Sou Builders would like to cam a profit of 16% of the variable cost of each home sold. Similar homes offered by competing builders sell for $202.000 cach. Assume the company has no fixed costs. Requirements 1. Which approach to pricing should Rouse Builders emphasize? Why? 2 Will Rouse Builders be able to achieve its target profit levels? 3. Bathrooms and kitchens are typically the most important selling features of a home, Rouse Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $22,000 per home but would enable Rouse Builders to increase the selling prices by $38,500 per home. (Kitchen and bathroom upgrades typically add about 175% of their cost to the value of any home.) If Rouse Builders makes the upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this manner? Requirements 1. Which approach to pricing should Rouse Builders emphasize? Why? 2. Will Rouse Builders be able to achieve its target profit levels? 3. Bathrooms and kitchens are typically the most important selling features of a home. Rouse Builders could differentiate the homes by upgrading the bathrooms and kitchens. The upgrades would cost $22,000 per home but would enable Rouse Builders to increase the selling prices by $38,500 per home. (Kitchen and bathroom upgrades typically add about 175% of their cost to the value of any home.) If Rouse Builders makes the upgrades, what will the new cost-plus price per home be? Should the company differentiate its product in this way? -lution: Requirement 1 Write narrative answer below Requirement 2 Relevant variable costs: Revenue per home Write narrative answer below