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Required information [The following information applies to the questions displayed below. Johnson and Gomez, Inc. is a small firm involved in the production and sale
Required information [The following information applies to the questions displayed below. 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 $189,000 and $270,000, respectively. The total market demand for each model is expected to be 45,000 units, and management anticipates being able to obtain the following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow Basic Enhanced $470.00 Projected selling price Per-unit production costs: 370.00 Direct material Direct labor Variable overhead 47.00 25.00 41.00 200,000 75.00 35.00 53.00 325,000 Marketing and advertising (fixed but avoidable) Sales commissions* 15% 20% Computed on the basis of sales dollars
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