odels: Basic and Enhanced. Development costs have amounted to $184,500 and $265,500, respectively. The total arket demand for each model is expected to be 42,000 units, and management anticipates being able to obtain the llowing market shares: Basic, 25 percent; Enhanced, 20 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Basic $ 355.00 44.00 23.50 38.00 197,000 10% Enhanced $ 455.00 70.50 32.00 50.00 310,000 10% Marketing and advertising (fixed but avoidable) Sales commissions* Computed on the basis of sales dollars. ince the start of development work on the Wireless Wizard, advances in technology have altered the market somewha nd management now believes that the company can introduce only one of the two models. Consultants confirmed this ct not too long ago, with Johnson and Gomez paying $34,700 for an in-depth market study. Sales salaries (excluding ommission) will be $86,500 no matter which product is sold. The marketing and advertising costs indicated for each roduct are incurred only if that product is sold. Other fixed overhead is expected to be the same, regardless of which

odels: Basic and Enhanced. Development costs have amounted to $184,500 and $265,500, respectively. The total arket demand for each model is expected to be 42,000 units, and management anticipates being able to obtain the llowing market shares: Basic, 25 percent; Enhanced, 20 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead Basic $ 355.00 44.00 23.50 38.00 197,000 10% Enhanced $ 455.00 70.50 32.00 50.00 310,000 10% Marketing and advertising (fixed but avoidable) Sales commissions* Computed on the basis of sales dollars. ince the start of development work on the Wireless Wizard, advances in technology have altered the market somewha nd management now believes that the company can introduce only one of the two models. Consultants confirmed this ct not too long ago, with Johnson and Gomez paying $34,700 for an in-depth market study. Sales salaries (excluding ommission) will be $86,500 no matter which product is sold. The marketing and advertising costs indicated for each roduct are incurred only if that product is sold. Other fixed overhead is expected to be the same, regardless of which

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

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