Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

McNulty, Inc, produces desks and chairs. A new CFO has just been hired and announces a new pollcy that if a product cannot earn a

image text in transcribed
image text in transcribed
image text in transcribed
McNulty, Inc, produces desks and chairs. A new CFO has just been hired and announces a new pollcy that if a product cannot earn a margin of at least 45 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost. Manufacturing overhead for year 1 totaled $848,000. 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 chair product. The company cost analyst estimates that overhead without the chair line will be $710,000. 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. 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 ( ), 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 $710,000. 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. Which of the two products should be dropped? 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 ( ), 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 $710,000. 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. 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 $710,000. 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.e., 32.1).)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Auditing And Forensic Accounting

Authors: Tommie W. Singleton, Aaron J. Singleton, G. Jack Bologna, Robert J. Lindquist

3rd Edition

0471785911, 978-0471785910

More Books

Students also viewed these Accounting questions

Question

BPR always involves automation. Group of answer choices True False

Answered: 1 week ago

Question

What is the preferred personality?

Answered: 1 week ago

Question

What is the relationship between humans?

Answered: 1 week ago