sa Valmont Company developed a new industrial piece of equipment called the XP-200. The company is...

 

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sa Valmont Company developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200-absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP 200 of $9,400. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing because it seems to overlook the fact that the XP 200 offers superior performance relative to the comparable piece of equipment sold by Valmont's primary competitor. More specifically, the XP-200 can be used for 19,000 hours before replacement. It only requires $2,000 of preventive maintenance during its useful life and it consumes $170 of electricity per 950 hours used. These figures compare favorably to the competing piece of equipment that sells for $19,000, needs to be replaced after 9.500 hours of use, requires $4,000 of preventive maintenance during its useful life, and consumes $200 of electricity per 950 hours used. Required: 1. If Valmont uses absorption cost-plus pricing, what price will it establish for the XP 200? 2. What is XP-200's economic value to the customer (EVC) over its 19,000-hour life? 3. If Valmont uses value-based pricing, what range of possible prices should it consider when setting a price for the XP-200? Complete this question by entering your answers in the tabs below. Required 1 and 2 Required 3 1. If Valmont uses absorption cost-plus pricing, what price will it establish for the XP-2007 2. What is XP-200's economic value to the customer (EVC) over its 19,000-hour life? 1 Selling price per unit S 17,300 2 EVC sa Valmont Company developed a new industrial piece of equipment called the XP-200. The company is considering two methods of establishing a selling price for the XP-200-absorption cost-plus pricing and value-based pricing. Valmont's cost accounting system reports an absorption unit product cost for XP 200 of $9,400. Its markup percentage on absorption cost is 85%. The company's marketing managers have expressed concerns about the use of absorption cost-plus pricing because it seems to overlook the fact that the XP 200 offers superior performance relative to the comparable piece of equipment sold by Valmont's primary competitor. More specifically, the XP-200 can be used for 19,000 hours before replacement. It only requires $2,000 of preventive maintenance during its useful life and it consumes $170 of electricity per 950 hours used. These figures compare favorably to the competing piece of equipment that sells for $19,000, needs to be replaced after 9.500 hours of use, requires $4,000 of preventive maintenance during its useful life, and consumes $200 of electricity per 950 hours used. Required: 1. If Valmont uses absorption cost-plus pricing, what price will it establish for the XP 200? 2. What is XP-200's economic value to the customer (EVC) over its 19,000-hour life? 3. If Valmont uses value-based pricing, what range of possible prices should it consider when setting a price for the XP-200? Complete this question by entering your answers in the tabs below. Required 1 and 2 Required 3 1. If Valmont uses absorption cost-plus pricing, what price will it establish for the XP-2007 2. What is XP-200's economic value to the customer (EVC) over its 19,000-hour life? 1 Selling price per unit S 17,300 2 EVC