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 $$207,000$ and $$288,000,$ respectively. The total

market demand for each model is expected to be $57,000$ units, and management anticipates being able to obtain the

following market shares: Basic, $25$ percent; Enhanced, $20$ percent. Forecasted data follow.

$*$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 $$36,200$ for an in$-$depth market study. Sales salaries $($excluding

commission$)$ will be $$94,000$ 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.

Problem $14-46$ Part $3$

$3-$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.

Complete this question by entering your answers in the tabs below.

Prepare a financial analysis and determine which of the two models should be introduced. $($Round intermediate calculations to

$2$ decimal places.$)$