Cables Electronics Corporation Has Developed a New Instrument-Model XG-75-That Has

question 262

Multiple Choice

Cables Electronics Corporation has developed a new instrument-model XG-75-that has been designed to outperform a competitor's best-selling instrument. Model XG-75 has a useful life of 40,000 hours of service and its operating cost is $2.80 per hour. In contrast, the competitor's product has a useful life of 20,000 hours of service and has operating costs that average $5.00 per hour. The competitor's instrument sells for $169,000. Cables has not yet established a selling price for model XG-75. From a value-based pricing standpoint what is the reference value that Cables should consider when pricing model XG-75?

• A) $269,000
• B) $281,000
• C) $338,000
• D) $169,000

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