Exercise 9-31 (Algo) Reported Costs and Decisions (LO 9-1) McNulty, Inc., produces desks and chalrs. A new CFO has just been hired and announces a new policy that If a product cannot earn a 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. Required: a-1. Based on the CFO's new policy, calculate the profit margin 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 chalr product. The company cost analyst estimates that overhead without the chalr 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 ? Complete this question by entering your answers in the tabs below. Based on the CFO's new policy, calculate the profit margin for both chairs and desks