Homework Answers
Calculation of Value based price of product XG-75 -
Operating cost per hour in XG-75 = $3.80
Operating cost per hour in Competitor's product = $7.40
Savings per hour in XG-75 = $7.40 - $3.80 = $3.60
Useful life of XG-75 = 92,000 Hours
Total Savings in XG-75 = 92,000 * $3.60 =$331,200
Selling price of Competitor's product = $122,000
Value based price of XG-75 = $331,200 + $122,000
Value based price of XG-75 = $453,200
Hence, the correct answer is D) $453,200
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