McNulty, Inc, produces desks and chairs. A rnew CFO hars just been hired and announces a new policy that if a product carinot earn a margin of at least 20 percent, it will be dropped. The margin is computed as product gross profit divided by reported product cost Manufactuning ovcrhcad tor year 1 totaled $912,0co Overhead is allocatod to products bascd on direct labor cost. Data tor year 1 show the tollowing Desks $1,278,800 2,302,500 Direct materials Direct labor 532,000 200,000 80,000 370,000 Required: a-1. Based on the CFO's new policy, calculate the pront margin for both chairs and desks. Profit Chairs Deske a-2. Which of the two products should be dropped? O Chains Desks b. Regardess 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 overheed without the chair line will be S730,000. 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 intermediate calculations Enter your answer aB a percentage rounded to 1 decimal place. r desks