**Johnson and Gomez, Inc. Overview**Johnson and Gomez, Inc., is a small firm specializing in the production and sale of electronic business products. Renowned for its dedication to quality and innovation, the company has developed a new product known as the Wireless Wizard over the past 15 months. This product promises enhanced access to email and video images. Two models have been designed for this product: Basic and Enhanced.**Development and Market Data**- Development costs: - Basic: $207,000 - Enhanced: $288,000- Projected market demand: 57,000 units- Market share forecast: - Basic: 25% - Enhanced: 20% **Financial Details per Model (Forecasted)**- **Projected selling price:** - Basic: $430.00 - Enhanced: $530.00- **Per-unit production costs:** - Direct material: - Basic: $59.00 - Enhanced: $93.00 - Direct labor: - Basic: $31.00 - Enhanced: $47.00 - Variable overhead: - Basic: $53.00 - Enhanced: $65.00- **Fixed marketing and advertising costs:** - Basic: $212,000 - Enhanced: $385,000- **Sales commissions:** - 15% for both models (based on sales dollars)**Market Study Insights**Recent technological advances have affected the market dynamics, allowing the introduction of only one model. A market study costing $36,200 has concluded that the essential sales salaries (excluding commission) will be $94,000 irrespective of the product sold. Marketing and advertising expenditures often vary depending on the model but are incurred only once the product is introduced.**Problem 14-46 Part 3: Instructions**3-a. Conduct a financial analysis to decide which model should be launched.3-b. Recommend whether the Enhanced or Basic model is preferable. **Analysis Section**- Perform calculations to ascertain total contribution margin.- Deduct marketing and advertising expenses to determine potential income.- Use rounded intermediate calculations (to two decimal places) for precision.**Input Section**The input section for solving these problems provides separate tabs labeled Req 3A and Req 3B for inputting calculations and solutions.

Corporation may face a situation where it has two alternatives and it needs to select one. The…

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. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Marketing and advertising (fixed but avoidable) Sales commissions* Problem 14-46 Part 3 Req 3A *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. Req 38 Complete this question by entering your answers in the tabs below. 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. Total contribution margin Less: Marketing and advertising Income Basic $ 430.00 Basic 59.00 31.00 53.00 212,000 0 S < Req 3A 15% Prepare a financial analysis and determine which of the two models should be introduced. (Round intermediate calculations to 2 decimal places.) Enhanced Enhanced $ 530.00 0 93.00 47.00 65.00 385,000 15% Req 3B >