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 $201,000 and $282,000, respectively. The total market demand for each model is expected to be 53,000 units, and management anticipates being able to obtain the following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead 55.00 29.00 49.00 Marketing and advertising (fixed but avoidable) 208,000 Sales commissions* 15% Basic $ 410.00 Unit contribution margin Basic Enhanced *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 $35,800 for an in-depth market study. Sales salaries (excluding commission) will be $92,000 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. Enhanced $ 510.00 Required: 1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.) 87.00 43.00 61.00 365,000 10%
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 $201,000 and $282,000, respectively. The total market demand for each model is expected to be 53,000 units, and management anticipates being able to obtain the following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow. Projected selling price Per-unit production costs: Direct material Direct labor Variable overhead 55.00 29.00 49.00 Marketing and advertising (fixed but avoidable) 208,000 Sales commissions* 15% Basic $ 410.00 Unit contribution margin Basic Enhanced *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 $35,800 for an in-depth market study. Sales salaries (excluding commission) will be $92,000 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. Enhanced $ 510.00 Required: 1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.) 87.00 43.00 61.00 365,000 10%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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 $201,000 and $282,000, respectively. The total
market demand for each model is expected to be 53,000 units, and management anticipates being able to obtain the
following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow.
Projected selling price
Per-unit production costs:
Direct material
Direct labor
Variable overhead
Marketing and advertising (fixed but avoidable) 208,000
Sales commissions*
15%
Basic
$ 410.00
Unit contribution margin
55.00
29.00
49.00
Basic
Enhanced
Enhanced
*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 $35,800 for an in-depth market study. Sales salaries (excluding
commission) will be $92,000 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.
$ 510.00
Required:
1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.)
87.00
43.00
61.00
365,000
10%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe57cd387-c624-43be-b8a9-995c5a6be8c8%2F949f85be-ffa5-47e0-93be-07e9f38de247%2Fns85yjr_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 $201,000 and $282,000, respectively. The total
market demand for each model is expected to be 53,000 units, and management anticipates being able to obtain the
following market shares: Basic, 20 percent; Enhanced, 15 percent. Forecasted data follow.
Projected selling price
Per-unit production costs:
Direct material
Direct labor
Variable overhead
Marketing and advertising (fixed but avoidable) 208,000
Sales commissions*
15%
Basic
$ 410.00
Unit contribution margin
55.00
29.00
49.00
Basic
Enhanced
Enhanced
*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 $35,800 for an in-depth market study. Sales salaries (excluding
commission) will be $92,000 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.
$ 510.00
Required:
1. Compute the unit contribution margin for both models. (Round your answers to 2 decimal places.)
87.00
43.00
61.00
365,000
10%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education