Business, 04.03.2021 20:10 kiannadgarnica

Johnson and Gomez, Inc. is a small firm involved in the production and sale of electronic business products. The company is well known for its attention to quality and innovation. During the past 15 months, a new product has been under development that allows users improved access to e-mail and video images. Johnson and Gomez code named the product the Wireless Wizard and has been quietly designing two models: Basic and Enhanced. Development costs have amounted to $183,000 and $264,000, respectively. The total market demand for each model is expected to be 41,000 units, and management anticipates being able to obtain the following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow.
Basic Enhanced
Projected Selling Price $350.00 $450.00
Per-unit productions costs:
Direct material 43.00 69.00
Direct labor 23.00 31.00
Variable overhead 37.00 49.00
Marketing and advertising (fixed but avoidable)
196,000 305,000
Sales commissions* 15% 10%
Computed on the basis of sales dollars.
Since the start of development work on the Wireless Wizard, advances in technology have altered the market somewhat, and management now believes that the company can introduce only one of the two models. Consultants confirmed this fact not too long ago, with Johnson and Gomez paying $34,600 for an in-depth market study. Sales salaries (excluding commission) will be $86,000 no matter which product is sold. The marketing and advertising costs indicated for each product are incurred only if that product is sold. Other fixed overhead is expected to be the same, regardless of which product is introduced.
Required:
1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.)
2. Which of the following should be ignored in making the product-introduction decision? (You may select more than one answer.)
a. Development costs
b. Market study
c. Marketing and Advertising
d. Fixed manufacturing overhead
e. Variable manufacturing overhead
f. Sales salaries
3-a. Prepare a financial analysis and determine which of the two models should be introduced.
3-b. The company would be advised to select the Enhanced model or Basic model?
4. What other factors should Johnson and Gomez, Inc. consider before a final decision is made?
a. Possibility of merger of the firm with a bigger player
b. Growth potential of the Basic and Enhanced models
c. Competitive products in the marketplace
d. Aesthetic differences between the two products
e. Break-even points
f. Data validity
g. Previous years' sales trends
h. Production feasibility
i. Effects, if any, on existing product sales

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 00:40

Gdonald was unhappy that his company did not provide good transport facilities. he found it very strenuous to drive to work on his own, and this eventually led to job dissatisfaction. hence, he recommended ways to solve this problem. according to the evln model, this information suggests that donald's main reaction to job dissatisfaction was:

Answers: 3

Answer

Business, 22.06.2019 16:00

Advanced enterprises reports year-end information from 2018 as follows: sales (160,250 units) $968,000 cost of goods sold 641,000 gross margin 327,000 operating expenses 263,000 operating income $64,000 advanced is developing the 2019 budget. in 2019 the company would like to increase selling prices by 14.5%, and as a result expects a decrease in sales volume of 9%. all other operating expenses are expected to remain constant. assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. should advanced increase the selling price in 2019?

Answers: 3

Answer

Business, 22.06.2019 17:30

After the embarrassing sign incident at the restaurant you own, you decide to offer employees a six-week fundamental writing skills workshop. a local business communication instructor, who has experience teaching writing skills at treleaven community college, will facilitate the sessions. to encourage employees to attend these optional sessions, write an email that explains why you’re offering the workshop and why employees should participate.

Answers: 2

Answer

Business, 22.06.2019 20:00

Harry is 25 years old with a 1.55 rating factor for his auto insurance. if his annual base premium is $1,012, what is his total premium? $1,568.60 $2,530 $1,582.55 $1,842.25

Answers: 1

Answer

You know the right answer?

Johnson and Gomez, Inc. is a small firm involved in the production and sale of electronic business p...

Questions