ACCT 631 Kitchen Magician/TUTORIALOUTLET DOT COM ACCT 631 Kitchen Magician/TUTORIALOUTLET DOT COM | Page 3

expected and Gomez paying $35,600 for an in-depth market study.
Sales salaries (excluding commission) will be $91,000 no matter each
model is expected to be 51,000 units, and management anticipates
being able to obtain the following market shares: ll be $91,000 no
matter which product is sold. The marketing and advertising costs
indicated for each product are incurred llowing market shares: Basic,
25 percent; Enhanced, 20 percent. Forecasted data follow. ch product
are incurred only if that product is sold. Other fixed overhead is
expected to be the same, regardless of which pro regardless of which
product is introduced. 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 $ 400 Enhanced $ 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 2. Which of the
following should be ignored in making the product-introduction
decision? (You may se Development costs unchecked Market study
unanswered Marketing and Advertising unanswered Fixed manufac
Development costs
Market study
Marketing and Advertising
Fixed manufacturing overhead
Variable manufacturing overhead
Sales salaries sale of electronic business products. The company is
well known for its attention to quality and innovation. that allows
users improved access to e-mail and video