Problem 14-46 Introducing a New Product (LO 144, 14-5 into the hned 5200 Johnson and Gomer, Inc. is a small firm involved in the production and sale of electronic business prod. ucts. 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 Wirard and has been quietly designing two models: Basic and Enhanced Development costs have amounted to 5121.000 and $175.000, respectively. The total market demand for each model is expected to be 40.000 units, and management anticipates being able to obtain the following market shares Batis, 25 percent Enhanced. 20 percent. Forecast data follow Bask $ 250 Endanced $ 330 Projected sig price Pet production Drea Director Verhead Waiting and svete buvo Saeco "Como escolar 20 15 24 30.000 10 15 20 32 200.000 11 Since the start of development work on the Wireless Wizard, advances in technology have alred the market somewhat, and management so believes that the company can introduce only one of the mo models. Consultants confirmed this fact not too long ago, with Johnson and Comez paying $23.000 for an in-depth market study. Sales salaries (excluding commission will be $57.000 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 2. Which of the data in the table above should be ignored in making the product-introduction deci sion? For what reason 2. Prepare a financial analysis and determine which of the two models should be introduced. 4. What other factors shoul Johnson and Gomes, Inc. consider before a final decision is made