15. Schimpf Industries Inc. has developed a new grinder, model WC-13, that is designed to offer superior performance to a comparable grinder sold by Schimpf’s main competitor. The competing grinder sells for $86,000 and needs to be replaced after 13,200 hours of use. It also requires $26,400 of preventive maintenance during its useful life. Model WC-13’s performance capabilities are similar to the competing product with two important exceptions—it needs to be replaced only after 52,800 hours of use and it requires $66,000 of preventive maintenance during its useful life.
From a value-based pricing standpoint what range of possible prices should Schimpf consider when setting a price for model WC-13?
15. Schimpf Industries Inc. has developed a new grinder, model WC-13, that is designed to offer superior performance to a comparable grinder sold by Schimpf’s main competitor. The competing grinder se...
Schimpf Industries Inc. has developed a new grinder, model WC-13, that is designed to offer superior performance to a comparable grinder sold by Schimpf’s main competitor. The competing grinder sells for $86,000 and needs to be replaced after 13,200 hours of use. It also requires $26,400 of preventive maintenance during its useful life. Model WC-13’s performance capabilities are similar to the competing product with two important exceptions—it needs to be replaced only after 52,800 hours of use and it requires...
Morice Industries Inc. has developed a new injection mold, model IA 05, that is designed to offer superior performance to a comparable injection mold sold by Morice's main competitor. The competing injection mold sells for $54,000 and needs to be replaced after 1000 hours of use. It also requires 57.000 of preventive maintenance during its useful life. Model IA-05's performance capabilities are similar to the competing product with two important exceptions-It needs to be replaced only after 2.000 hours of...
McDermott Company has developed a new industrial component called IC-75. The company is excited about IC-75 because it offers superior performance relative to the comparable component sold by McDermott's primary competitor. The competing part sells for $1,560 and needs to be replaced after 2,360 hours of use. It also requires $380 of preventive maintenance during its useful life. The IC-75's performance capabilities are similar to its competing product with two important exceptions-it needs to be replaced after 4,720 hours of...
EXERCISE 12A-6 Value-Based Pricing; Absorption Costing Approach to Cost-Plus Pricing L012-8, L012–10 Valmont Company has developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200—absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP-200 of $8,400. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing...