Morice Industries Incorporated Has Developed a New Injection Mold, Model

question 291

Multiple Choice

Morice Industries Incorporated 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 1,000 hours of use. It also requires $7,000 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 use and it requires $8,000 of preventive maintenance during its useful life.From a value-based pricing standpoint what is model IA-05's economic value to the customer over its 2,000 hour life?

• A) $114,000
• B) $68,000
• C) $108,000
• D) $60,000

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