Chapter 25, Problem E25.12E

To determine

Concept Introduction:

Target Pricing: In Target pricing the pricing of services/product is fixed first. The pricing is fixed on the basis of market research. After fixing the prices the desired profit margin is deducted from prices to get the cost under which industry should opearte to remain a profitable venture.

Cost Plus Pricing: In Cost Plus Pricing , the Pricing is decided on the basis of Cost based method. In this first of all variable and fixed cost is added to get total cost . In total Cost the desired profit margin is added to get the pricing of a product.

Requirement1

1. Approach to Pricing Rouse Builders should emphasize.

To determine

Requirement 2

1. Whether Rouse Builder able to achieve target profit

To determine

Requirement 3

1. The New Cost Plus Price per Home

2. Should Company able to differentiate its product