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McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces...

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McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new pollcy that if a product cannot earm a margin of at least 20 percent, in will be dropped. The margin is computed as product gross pront divided by reported product cost Manufacturing overhead for year 1 totaled $1,005,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following Chairs Sales revenue Direct materials Direct labor $1,212,100 $2,781.250 1,000,000 490,000 604,000 180,000 Required a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks Answer is complete but not entirely correct. Chairs Desks 130196 2001% a-2. Which of the two products should be dropped? O Chairs Desks b. Regardiess of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The company cost analyst estimates that overhea year 2? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.) ad without the chair line will be $850,000. The revenue and costs for desks are expected to be the same as last year What is the estimated margin for desks i Answer is complete but not entirely correct. 1590

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