Blauvelt Electronics Corporation Has Developed a New Instrument-Model GZ-29-That Has

question 180

Multiple Choice

Blauvelt Electronics Corporation has developed a new instrument-model GZ-29-that has been designed to outperform a competitor's best-selling instrument. Model GZ-29 has a useful life of 30,000 hours of service and its operating cost is $3.20 per hour.In contrast, the competitor's product has a useful life of 10,000 hours of service and has operating costs that average $5.60 per hour. The competitor's instrument sells for $149,000. Blauvelt has not yet established a selling price for model GZ-29.From a value-based pricing standpoint what is the differentiation value offered by GZ-29 relative to the competitor's offering for each 30,000 hours of service?

• A) $245,000
• B) $205,000
• C) $72,000
• D) $370,000

---

Definitions:

Break-even Analysis

A financial calculation to determine the point at which a business, product, or project will become profitable, by equating total revenues with total costs.

Single Product

Referring to businesses or production processes that focus on the manufacture or sale of one specific product.

Redesign

The process of changing or modifying the design of a product, service, or system to improve functionality or aesthetics.