ACCT 631 Kitchen Magician/TUTORIALOUTLET DOT COM ACCT 631 Kitchen Magician/TUTORIALOUTLET DOT COM | Page 2

product should the firm manufacture? How many units of each
product should be purc
erial for an electric mixer to $19 per unit, how many units of each
product should be manufactured? Purchased? ategy, how many units
of each product should the firm manufacture? How many units of
each product should be purchased n electric mixer to $19 per unit,
how many units of each product should be manufactured? Purchased?
ales orders, even if it means purchasing units from outside suppliers.
ach product should be purchased?
Purchased? oduct should be purchased? Johnson and Gomez, Inc. is a
small firm involved in the production and sale of electronic business
pro During the past 15 months, a new product has been under
development that allows users improved a Basic
Projected selling
price $ Enhanced 400 $ 500 Per-unit
production costs: Direct
material 53 84 Direct labor 28 41 Variable
overhead 47 59 206,000 355,000 Marketing and
advertising (fixed
but avoidable) Sales commissions* 15 % 20 *Computed on the basis
of sales dollars. Since the start of development work on the Wireless
Wizard, advances in technology have altered the
Required: 1. Compute the unit contribution margin for both models.
(Round your answers to 2 decimal places
Basic
Unit contribution margin Enhanced of electronic business products.
The company is well known for its attention to quality and
innovation. allows users improved access to e-mail and video images.
Johnson and Gomez code named the product the Wireless Wiz
Enhanced % chnology have altered the market somewhat, and
management now believes that the company can introduce only one
of th wers to 2 decimal places.) roduct the Wireless Wizard and has
been quietly designing two models: Basic and Enhanced.
Development costs have amo ntroduce only one of the two models.
Consultants confirmed this fact not too long ago, with Johnson and
Gomez paying $35 opment costs have amounted to $198,000 and
$279,000, respectively. The total market demand for each model is