Homework Answers
Answer:
|
New cost plus price per home: |
|
|
Particulars |
Amount |
|
Current Variable Cost per home |
$ 179,000 |
|
Plus Variable cost of Kitchen and Bathroom upgrade per home |
$ 30,000 |
|
Total Variable cost per home |
$ 209,000 |
|
Plus Desired profit per home ($209000*16%) |
$ 33,440 |
|
Cost Plus price per home |
$ 242,440 |
Yes, the company should differentiate its product in this manner as on upgradation company can earn more than desired profit.
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