Tavis Robotics Corporation Has Developed a New Robot-Model FI-73-That Has

question 127

Multiple Choice

Tavis Robotics Corporation has developed a new robot-model FI-73-that has been designed to outperform a competitor's best-selling robot. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $4.60 per hour, and sells for $109,000. In contrast, model FI-73 has a useful life of 30,000 hours of service and its operating cost is $2.60 per hour. Tavis has not yet established a selling price for model FI-73.
-From a value-based pricing standpoint what range of possible prices should Tavis consider when setting a price for FI-73?

• A) $187,000 ≤ Value-based price ≤ $278,000
• B) $109,000 ≤ Value-based price ≤ $187,000
• C) $109,000 ≤ Value-based price ≤ $387,000
• D) $278,000 ≤ Value-based price ≤ $387,000

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Definitions:

Common Size Statements

Financial statements that present all line items as a percentage of a common base figure, facilitating comparison across periods and companies.

Sales Dollar

A term that reflects the total revenue generated from sales activities, measured in dollars.

Bottom Line

A term referring to a company's net income, indicating the essential outcome of its financial activities over a specified period.

Time-series Analysis

A statistical technique that analyzes a series of data points, usually collected at consistent intervals, to identify trends, cycles, or seasonal variations.