George Jettson builds custom homes in Cincinnati.Jettson was approached not too long ago by a client about a potential project,and he submitted a bid of $590,000,derived as follows:
A.A relevant cost analysis shows that the home is still profitable at $455,000,and the offer should be accepted.Keep in mind that business is very slow.

A.Suppose that business is presently very slow,and the client countered with an offer on this home of $455,000.Should Jettson accept the client's offer? Why?
B.If Jettson has more business than he can handle,how much should he be willing to accept for the home? Why?
B.Since demand is very strong,Jettson should hold firm to the $590,000 price.This way he can cover all of his costs and make his normal 25% profit margin.

Question

George Jettson builds custom homes in Cincinnati.Jettson was approached not too long ago by a client about a potential project,and he submitted a bid of $590,000,derived as follows:
A.A relevant cost analysis shows that the home is still profitable at $455,000,and the offer should be accepted.Keep in mind that business is very slow.
  
A.Suppose that business is presently very slow,and the client countered with an offer on this home of $455,000.Should Jettson accept the client's offer? Why?
B.If Jettson has more business than he can handle,how much should he be willing to accept for the home? Why?
B.Since demand is very strong,Jettson should hold firm to the $590,000 price.This way he can cover all of his costs and make his normal 25% profit margin.

Quizplus · Accepted Answer

The Answer of George Jettson builds custom homes in Cincinnati.Jettson was approached not too long ago by a client about a potential project,and he submitted a bid of $590,000,derived as follows:
A.A relevant cost analysis shows that the home is still profitable at $455,000,and the offer should be accepted.Keep in mind that business is very slow.
  
A.Suppose that business is presently very slow,and the client countered with an offer on this home of $455,000.Should Jettson accept the client's offer? Why?
B.If Jettson has more business than he can handle,how much should he be willing to accept for the home? Why?
B.Since demand is very strong,Jettson should hold firm to the $590,000 price.This way he can cover all of his costs and make his normal 25% profit margin.

George Jettson Builds Custom Homes in Cincinnati