Exercise 9-31 (Algo) Reported Costs and Decisions (LO 9-1) McNulty, Inc. produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot earn margin of at least 15 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $910,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following 27 Sales revenue Direct materials Direct labor Chairs $1,112,100 603,000 170,000 Desko $2,570,400 990,000 480,000 Required: 0-1. Based on the CFO's new policy, calculate the margin (as defined by the new CFO) for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless 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 overhead without the chairline will be $840,000. 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? Complete this question by entering your answers in the tabs below. Reg A1 Req A2 ReqB Based on the CFO's new policy, calculate the profit margin for both chairs and deska Chairs Pront Margin % % Desks RA Req A2 > McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product can margin of at least 15 percent, it will be dropped. The margin is computed as product gross profit divided by reported produc Manufacturing overhead for year 1 totaled $910,000. Overhead is allocated to products based on direct labor cost. Data for show the following Sales revenue Direct materials Direct labor Chairs $1,112,100 603,000 170,000 Desks $2,570,400 990,000 480,000 Required: 2-1. Based on the CFO's new policy, calculate the margin (as defined by the new CFO) for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The cost analyst estimates that overhead without the chairline will be $840,000. The revenue and costs for desks are expected same as last year. What is the estimated margin for desks in year 2? Complete this question by entering your answers in the tabs below. Req A1 Reg A2 Reg B Which of the two products should be dropped? Chairs Desks Required: 8-1. Based on the CFO's new policy, calculate the margin (as defined by the new CFO) for both chairs and desks. a-2. Which of the two products should be dropped? b. Regardless of your answer in requirement (a), the CFO decides at the beginning of year 2 to drop the chair product. The comp cost analyst estimates that overhead without the chair line will be $840,000. The revenue and costs for desks are expected to be same as last year. What is the estimated margin for desks in year 2? 14:02 Complete this question by entering your answers in the tabs below. Req Al Reg A2 Red B Regardless 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 overhead without the chair line will be $840,000. 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? (Enter your answer as a percentage rounded to 1 decimal place (I... 32.1).) Show less Estimated miroin for donke - Your 2 %
