Thank you! CoursHeroTranscribedText: McNulty, Inc., produces desks and chairs. A new CFO has just...
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CoursHeroTranscribedText: McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn a margin of at least 45 percent, it will be dropped. The margin is computed as product gross prot 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 Desks Sales revenue 310,800 8 2,9?0,000 Direct materials 59?,000 930,000 Direct labor 250,000 I. 420,000 I Req ulred: a-1. Based on the CFD's new policy, calculate the profit margin for both chairs and desks. - - - a-z 1|Iu'v'hich of the two products should be dropped? l:I. Regardless of your answer in requirement {aJ, Jthe CFO decides at the beginning of year Zto drop the chair product. The company cost analyst estimates that overhead without the chair line will be S?00,000. The revenue and costs for desks are expected to be the same as last year. What is the estimated margin for desks in year 2? [Do not round Intennedlate calculatlons. Enter your answer as a percentage rounded to 1 decimal place.) Estimated margin for desks - Year 2
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