Question

B (Short Responses)-INSTRUCTIONS; Read each question carefully and provide an appropriate short sponse answer/interpretation. ALL CALCULATIONS must be shown in order to receive full credit. 1. Miracle Shield Auto Finish is a substitute for commercial car wax and it protects and maintains the shine of a car's finish at least 2 times longer than regular car wax and it takes 2 hours to apply. Regular wax costs about $6.00 per container and takes 1 hour to apply. Commercial car detailers require cleaning with an oxidation cleaner before they can apply regular car wax. Oxidation cleaner costs $2.50 per bottle (good for one application) and can be applied in about one hour. Miracle Shield requires a final spray mist coat to seal the finish, which generally costs about $1 per bottle and an additional hour to cure and buff. The typical labor cost is $10.00 per hour at commercial car detailers, but Miracle Shield Auto Finish provides special training to detailers who then charge $12 per hour (a) Use EVC analysis to calculate the value of Miracle Shield Auto Finish. [4 points] (b) If variable costs are about $8, recommend a price for a bottle of Miracle Shield Auto Finish if they were to pursue a penetration strategy. Justify/explain your recommendation. [1 point]

Answer 1

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9. Variable Chs-H ave abore one 0