Question

Gildea Builders builds 1,500-square-foot starter tract homes in the fast-growing suburbs of Boston. Land and labor are cheap, and competition among developers is fierce. The homes are "cookie-cutter," with any upgrades added by the buyer alter the sale. Gildea Builders' cost per developed sublot are as follows: BE (Click the icon to view the costs.) Gildea Builders would like to earn a profit of 14% of the variable cost of each home sale. Similar homes offered by competing builders sell for $205,000 each Read the requirements Requirement 1. Which approach to pricing should Gildea Builders emphasize? Why? stiff competition, Gidea will Gildea will need to emphasize a target-costing approach to pricing Because the tract homes are not unique and face not have much control over pricing Requirement 2. Will Gidea Builders be able to achieve its target profit levels? Show your computations Complete the following table to show whether Gidea Builders will be able to achieve their target profit lovels. (Use parentheses or a minus sign to indicate a profit shortfall.) Choose from any list or enter any number in the input fields and then click Check Answer

Answer 1

Since requirement 1 already done i am doing 2

2)Total variable costs=land+construction+landscaping+variable marketing costs
=55000+122000+6000+4000=$187,000
Desired profit=14%*variable costs
=14%*187000=$26,180

1 Revenue at market price 2 Less:Desired profit 3 Target cost per home 4 Less:Actual current variable costs 5 Expected excess profit(profit shortfall) $ 205,000.00 $ 26,180.00 $ 178,820.00 $ 187,000.00 $ (8,180.00)

1 Revenue at market price 2 Less:Desired profit 3 Target cost per home 4 Less:Actual current variable costs 5 Expected excess profit profit shortfall) 205000 26180 =B1-B2 187000 =B3-B4