The Betterbilt Construction Company designs and builds residential mobile homes. The company is ready to construct, in sequence, 16 new homes of 2,400 square feet each. The successful bid for the construction materials in the first home is $64,800, or $27 per square foot. The purchasing manager believes that several actions can be taken to reduce material costs by 8% each time the number of homes constructed doubles. Based on this information, a. What is the estimated cumulative average material cost per square foot for the first five homes? b. What is the estimated material cost per square foot for the last (16th) home?
Customary Pricing
There are various types of pricing strategies followed in the market. They are psychological pricing, odd pricing, free onboard pricing, customary pricing, prestige pricing, dual pricing, ruling pricing, negotiated pricing, mark up pricing, etc. each one can be explained as follows:
Multiple Unit Pricing
“Multiple-unit pricing is a practice where a company offers consumers a lower than unit price if a specified number of units are purchased.”
The Betterbilt Construction Company designs and builds residential mobile homes. The
company is ready to construct, in sequence, 16 new homes of 2,400 square feet each. The
successful bid for the construction materials in the first home is $64,800, or $27 per square foot.
The purchasing manager believes that several actions can be taken to reduce material costs by
8% each time the number of homes constructed doubles. Based on this information,
a. What is the estimated cumulative average material cost per square foot for the first five
homes?
b. What is the estimated material cost per square foot for the last (16th) home?
Given information,
Total Homes = 16
Square feet = 2400
The successful bid for the construction material = $64800
Square foot = 27
Material cost = 8%
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