2.

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 $92,000 and needs to be replaced after 28,600 hours of use. It also requires $57,200 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 114,400 hours of use and it requires $143,000 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? Multiple Choice $92,000 s Value-based price s $453,800 $361,800 s Value-based price s $368,000 $92,000 s Value-based price s $368,000 $361,800 s Value-based price s $453,800 Nance Corporation is about to introduce a new product. The following costs would be incurred if 29,000 units are produced and sold each year: Per Unit Total Variable production costs Fixed production costs Variable selling and administrative costs Fixed selling and administrative costs $10 $290,000 $ 8 $ 2 $ 3 $232,000 $58,000 $ 87,000 Nance Corporation uses the absorption costing approach to cost-plus pricing as described in the text Assume that the company has not yet determined a markup to use on the new product. The new product would require an investment of $1,150,000. The company requires a 30% rate of return on investment in all new products. The markup under the absorption costing approach would be closest to: Ecob Corporation uses the absorption costing approach to cost-plus pricing as describeed in the text to set prices for its products. Based on budgeted sales of 27,000 units next year, the unit product cost of a particular product is $61.30. The company's selling and administrative expenses for this product are budgeted to be $381,600 in total for the year. The company has invested $350,000 in this product and expects a return on investment of 10%. The markup on absorption cost for this product would be closest to: (Do not round intermediate calculations.)