Montecalvo Logistic Solutions Corporation has developed a new forklift-model PI-28-that has been designed to outperform a competitor's best-selling forklift. The competitor's product has a useful life of 10,000 hours of service, has operating costs that average $9.70 per hour, and sells for $139,000. In contrast, model PI-28 has a useful life of 20,000 hours of service and its operating cost is $5.50 per hour. Montecalvo has not yet established a selling price for model PI-28.From a value-based pricing standpoint what is the differentiation value offered by PI-28 relative to the competitor's offering for each 20,000 hours of service?
A) $223,000
B) $236,000
C) $84,000
D) $249,000

Question

Quizplus · Accepted Answer

The differentiation value offered by PI-28 relative to the competitor's offering for each 20,000 hours of service is $223,000. This is calculated as follows:(20,000 hours * $9.70 per hour) - (20,000 hours * $5.50 per hour) = $223,000

Montecalvo Logistic Solutions Corporation Has Developed a New Forklift-Model PI-28-That