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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 $190,500 and $271,500, respectively. The total market demand for each model is expected to be 46,000 units, and management anticipates being able to obtain the following market shares: Basic, 30 percent; Enhanced, 25 percent. Forecasted data follow.
Basic | Enhanced | ||||||
Projected selling price | $ | 375.00 | $ | 475.00 | |||
Per-unit production costs: | |||||||
Direct material | 48.00 | 76.50 | |||||
Direct labor | 25.50 | 36.00 | |||||
Variable overhead | 42.00 | 54.00 | |||||
Marketing and advertising (fixed but avoidable) | 201,000 | 330,000 | |||||
Sales commissions* | 10 | % | 10 | % | |||
*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 $35,100 for an in-depth market study. Sales salaries (excluding commission) will be $88,500 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.
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Required information [The following information applies to the questions displayed below.] Johnson and Gomez, Inc. is...
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,...
Problem 14-46 Introducing a New Product (LO 14-4, 14-5) [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...
Question 5: Relevant information for decisions (20 marks in total) Digg Limited 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 enables a hand-held device to scan a 3D object and send the scan to a remote 3D printer for printing. Digg Limited named the product ‘3D Wizard’ and has...
Question 1: Question 2: Required information [The following information applies to the questions displayed below.) Madrid Corporation has compiled the following information from the accounting system for the one product it sells. $ 630 per unit $ 140,400 $ 164,700 Sales price Fixed costs (for the month) Marketing and administrative Manufacturing overhead Variable costs (per unit) Marketing and administrative Direct materials Manufacturing overhead Direct labor Units produced and sold (for the month) $ 26 $ 180 $ 26 110 2,700...
Required information [The following information applies to the questions displayed below.] Badger Valve and Fitting Company, located in southern Wisconsin, manufactures a variety of industrial valves and pipe fittings that are sold to customers in nearby states. Currently, the company is operating at about 70 percent capacity and is earning a satisfactory return on investment. Management has been approached by Glasgow Industries Ltd. of Scotland with an offer to buy 170,000 units of a pressure valve. Glasgow Industries manufactures a...
Required information The following information applies to the questions displayed below.) Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. Model no. 6754: Variable costs, $18.00 per unit Annual fixed costs, $986,200 Model no. 4399: Variable costs, $11.80 per unit Annual fixed costs, $1,114,200 Corrigan's selling price is $66 per unit for the universal gismo, which is subject to a 10 percent sales...
Required information [The following information applies to the questions displayed below.) Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow. Model no. 6754: Variable costs, $18.00 per unit Annual fixed costs, $986,500 Model no. 4399: Variable costs, $10.80 per unit Annual fixed costs, $1,113,600 Corrigan's selling price is $63 per unit for the universal gismo, which is subject to a 10 percent sales...
Required information The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 36 Beta $ 24 27 17 32 19...
Required information {The following information applies to the questions displayed below. Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta $12 20 Direct materials Direct labor...
Required information The following information applies to the questions displayed below. Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta $10 21 Direct materials Direct labor Variable manufacturing...