Custom Homebuilders (CH) designs and constructs high-end homes on large lots owned by customers. CH has developed several formulas, which it uses to quote jobs. These include costs for materials, labor, and other costs. These estimates are also dependent on the region of the country a particular customer lives. Below are the cost estimates for one region in the Midwest:Administrative costs $ 40,000 Building costs – per square foot (basic) $ 120 Building costs – per square foot (moderate) $ 220 Building costs – per square foot (luxury) $ 260 Appliances (basic) $ 35,000 Appliances (moderate) $ 45,000 Appliances (luxury) $ 65,000 Utilities costs (if required) $ 60,000 Required:a. A customer has expressed interest in having CH build a moderate, 3,800 square-foot home on a vacant lot, which does not have utilities. Based on the engineering estimates above, what will such a house cost to build?

To answer this question, we were told that the customer wants to build a moderate 3,800 square foot home. However, although it says with no utilities, utility cost will be applicable because it represents what is needed by the builders and engineers to get their work done on the vacant lot of land.

Therefore, the cost to build = Administrative cost + Building cost (moderate) + appliances cost + utilities cost

= $40,000 + (220 x 3800 square foot) + $45,000+ $60,000

=$40,000 + $836,000 + $45,000+ $60,000

= $981,000