Johnson and Gomez, Inc., is a small rm 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 email 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 $204,000 and $285,000, respectively. The total market demand for each model is expected to be 55,000 units, and management anticipates being able to obtain the following market shares: Basic, 30 percent; Enhanced, 25 percent. Forecasted data follow. asic Enhanced Projected selling price $ 420.00 $ 520.66 Per-unit production costs: Direct material 5?.00 90.66 Direct labor 30.00 45.66 Variable overhead 51.00 63.66 Marketing and advertising (fixed but avoidable) 216,000 3?5,066 Sales commissionst 15% 26% *Computed on the basis of sales dollars. Since the start of development work on the Wireless Wizard, advances in technology have attered 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 paving $36,000 for an indepth market study. Sales salaries {excluding commission] will be $93,000 no matter which product is sold. The marketing and advertising costs indicated for each product are incurred only ifthat product is sold- Other xed overhead is expected to be the same, regardless of which product is introduced. 1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.) Basic Enhanced Unit contribution margin1 Which of the following should be ignored in making the productintroduction decision? [You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.} I] Development costs I] Market study I] Marketing and Advertising I] Fixed manufacturing overhead I] Variable manufacturing overhead Prepare a financial analysis and determine which of the two models should be introduced. (Round intermediate calculations to 2 decimal places.) Basic Enhanced Total contribution margin Income 0 04. What other factors should Johnson and Gomez, Inc.= consider before a nal decision is made? [You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.} I] Possibility of merger of the firm with a bigger player I] Growth potential of the Basic and Enhanced models I] Competitive products in the marketplace I] Aesthetic differences between the two products I] Breakeven points I] Data validity I] Previous years' sales trends I] Production feasibility D Effects, ifany, on existing product sales