22.

Schimpf Industries Incorporated has developed a new grinder, model WC-13, that is designed to offer superior performance to a comparable grinder sold by Schimpfs main competitor. The competing grinder sells for $82,000 and needs to be replaced after 13,700 hours of use. It also requires $27,400 of preventive maintenance during its useful life. Model WC-13s performance capabilities are similar to the competing product with two important exceptionsit needs to be replaced only after 54,800 hours of use and it requires $68,500 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

• $287,100 Value-based price $369,100

• $287,100 Value-based price $328,000

• $82,000 Value-based price $369,100

• $82,000 Value-based price $328,000

3.

Perwin Corporation estimates that an investment of $660,000 would be needed to produce and sell 44,000 units of Product B each year. At this level of activity, the unit product cost would be $30. Selling and administrative expenses would total $669,900 each year. The company uses the absorption costing approach to cost-plus pricing described in the text. If a 15% rate of return on investment is desired, then the required markup for Product B would be closest to: (Do not round intermediate calculations.)