Solved: Rouse Builders builds 1 500 square foot starter

tract homes in the fast growing

Rouse Builders builds 1 500 square foot starter tract homes in the fast growing

Rouse Builders builds 1,500-square-foot starter tract homes in the fast-growing suburbs of
Atlanta. Land and labor are cheap, and competition among developers is fierce. The homes are
a standard model, with any upgrades added by the buyer after the sale. Rouse Builders’ costs
per developed sub lot are as follows:

Land........................................ $ 51,000

Construction............................ 121,000

Landscaping............................ 5,000

Variable selling costs.............. 4,000

Rouse Builders would like to earn a profit of 16% of the variable cost of each home sold. Similar
homes offered by competing builders sell for $202,000 each. 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?

Rouse Builders builds 1 500 square foot starter tract homes in the fast growing

ANSWER
https://solvedquest.com/rouse-builders-builds-1-500-square-foot-starter-tract-homes-in-the-fast-
growing/

Reach out to freelance2040@yahoo.com for enquiry.

 Reach out to freelance2040@yahoo.com for enquiry.
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