EP FINANCIAL+MANAGERIAL ACCT. >CUSTOM<
5th Edition
ISBN: 9781323590287
Author: *ST.LEO UNIV.
Publisher: PEARSON C
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Question
Chapter 25, Problem 12E
1.
To determine
State the pricing approach that Person J must empathize.
2.
To determine
Identify whether the Company J will be able to achieve its target profit levels.
3.
To determine
Calculate the new cost-plus price per home and explain whether the company must differentiate its product.
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Students have asked these similar questions
Root Builders builds 1,500-square-foot starter tract homes in the fast-growing suburbs of Albany. 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. Root Builders' cost per developed sublot are as follows:
Land. . . . . . . . . . . . . . . . . . . . .
$59,000
Construction. . . . . . . . . . . . . . .
$120,000
Landscaping. . . . . . . . . . . . . . .
$9,000
Variable marketing costs. . . . . .
$3,000
Root Builders would like to earn a profit of 15% of the variable cost of each home sale. Similar homes offered by competing builders sell for $209,000 each.
Requirements:
1. Which approach to pricing should Root Builders emphasize? Why?
2. Will Root 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. Root Builders could differentiate…
Dominic 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 “cookie-cutter,” with any upgrades added by the buyer after the sale. Dominic Builders’ costs per developed sublot are as follows in the graph below:
Dominic 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 $202,000 each.
Requirements
1. Which approach to pricing should Dominic Builders emphasize? Why?
2. Will Dominic 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. Dominic Builders could differentiate the homes by upgrading bathrooms and kitchens. The upgrades would cost $20,000 per home but would enable the company to increase the selling prices by $35,000 per home (in general, kitchen and bathroom…
Smith
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.
Smith
Builders' costs per developed sublot are as follows:
1(Click
the icon to view the costs.)
Smith
Builders would like to earn a profit of
14%
of the variable cost of each home sold. Similar homes offered by competing builders sell for
$206,000
each. Assume the company has no fixed costs.
Read the
requirements2.
Requirement 1. Which approach to pricing should
Smith
Builders emphasize? Why?
Smith
Builders will need to emphasize a
target-costing
approach to pricing because they are
price-takers.
This means
Smith
will
not have much
control over pricing because the tract homes are
not unique and face
stiff competition.
Requirement 2. Will
Smith
Builders be able to achieve…
Chapter 25 Solutions
EP FINANCIAL+MANAGERIAL ACCT. >CUSTOM<
Ch. 25 - Doherty Company is considering replacing the...Ch. 25 - Prob. 2TICh. 25 - Prob. 3TICh. 25 - Prob. 4TICh. 25 - Prob. 5TICh. 25 - Prob. 6TICh. 25 - Thomas Company makes a product that regularly...Ch. 25 - Prob. 8TICh. 25 - McCollum Company manufactures two products. Both...Ch. 25 - Prob. 10TI
Ch. 25 - Grimm Company makes decorative wedding cakes. The...Ch. 25 - Prob. 12TICh. 25 - Prob. 1QCCh. 25 - Prob. 2QCCh. 25 - Which of the following costs are irrelevant to...Ch. 25 - When making decisions, managers should consider a....Ch. 25 - When pricing a product or service, managers must...Ch. 25 - When companies are price-setters, their products...Ch. 25 - Prob. 7QCCh. 25 - In deciding which product lines to emphasize when...Ch. 25 - When making outsourcing decisions, which of the...Ch. 25 - When deciding whether to sell as is or process a...Ch. 25 - List the four steps in short-term decision making....Ch. 25 - Prob. 2RQCh. 25 - What makes information irrelevant to decision...Ch. 25 - What are sunk costs? Give an example.Ch. 25 - Prob. 5RQCh. 25 - Prob. 6RQCh. 25 - What are the two keys in short-term decision...Ch. 25 - What questions should managers answer when setting...Ch. 25 - Prob. 9RQCh. 25 - What is target pricing? Who uses it?Ch. 25 - What does the target full product cost include?Ch. 25 - What is cost-plus pricing? Who uses it?Ch. 25 - What questions should managers answer when...Ch. 25 - When completing a differential analysis, when are...Ch. 25 - Prob. 15RQCh. 25 - What questions should managers answer when...Ch. 25 - Prob. 17RQCh. 25 - What is a constraint?Ch. 25 - Prob. 19RQCh. 25 - What is the decision rule concerning products to...Ch. 25 - Prob. 21RQCh. 25 - Prob. 22RQCh. 25 - What questions should managers answer when...Ch. 25 - What questions should managers answer when...Ch. 25 - Prob. 25RQCh. 25 - Prob. 26RQCh. 25 - You are trying to decide whether to trade in your...Ch. 25 - Skiable Acres operates a Rocky Mountain ski...Ch. 25 - Refer to details about Skiable Acres from Short...Ch. 25 - Prob. 4SECh. 25 - StoreAll produces plastic storage bins for...Ch. 25 - Suppose Roasted Pepper restaurant is considering...Ch. 25 - Priscilla Smiley manages a fleet of 250 delivery...Ch. 25 - Heavenly Dessert processes cocoa beans into cocoa...Ch. 25 - Dan Jacobs, production manager for GreenLife,...Ch. 25 - Suppose the Baseball Hall of Fame in Cooperstown,...Ch. 25 - Prob. 11ECh. 25 - Prob. 12ECh. 25 - Top managers of Video Avenue are alarmed by their...Ch. 25 - Refer to Exercise E25-13. Assume that Video Avenue...Ch. 25 - Prob. 15ECh. 25 - Moore Company sells both designer and moderately...Ch. 25 - Prob. 17ECh. 25 - Cool Systems manufactures an optical switch that...Ch. 25 - Refer to Exercise E25-18. Cool Systems needs...Ch. 25 - NaturalMaid processes organic milk into plain...Ch. 25 - Sea Blue manufactures flotation vests in...Ch. 25 - Prob. 22APCh. 25 - Members of the board of directors of Security...Ch. 25 - Brinn, located in Port St. Lucie, Florida,...Ch. 25 - Snow Ride manufactures snowboards. Its cost of...Ch. 25 - Prob. 26APCh. 25 - Prob. 27BPCh. 25 - Green Thumb operates a commercial plant nursery,...Ch. 25 - Members of the board of directors of Security Team...Ch. 25 - Prob. 30BPCh. 25 - Prob. 31BPCh. 25 - Elm Petroleum has spent 204,000 to refine 61,000...Ch. 25 - Prob. 34PCh. 25 - The Boeing Company manufacturers many different...Ch. 25 - Prob. 1EI
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