Tracey Douglas is the owner and managing director of Heritage Garden Furniture Ltd., a South African company that makes museumquality reproductions of antique outdoor furniture. Tracey would like advice concerning the advisability of ellminating the model C3 lawn chair. These lawn chairs have been among the company's best-selling products, but they seem unprofitable. A condensed statement of operating Income for the company and for the model C3 lawn chair for the quarter ended June 30 follows: "The currency in South Africa is the rand, denoted here by R. The following additional data have been supplied by the company. a. Direct labour Is a varlable cost at Heritage Garden Furniture. b. All of the company's products are manufactured In the same facility and use the same equipment. Bullding rent, maintenance, and depreclation are allocated to products using various bases. The equipment does not wear out through use; it eventually becomes obsolete. c. There is ample capacity to fill all orders. d. Dropping the model C3 lawn chair would have no effect on sales of other product lines. e. Inventorles of work in process or finished goods are Insignificant. f. Shipping costs are traced directly to products. g. General administrative expenses are allocated to products on the basis of sales dollars. There would be no effect on the total general administrative expenses if the model C 3 lawn chalr were dropped. h. If the model C3 lawn chalr were dropped, the product manager would be laid off. Required: a-1. At current level of sales, compute the effect of net operating income If the Model C3 lawn chair is dropped. 1-b. Would you recommend that the model C3 lawn chair be dropped? Yes No 2. What would sales of the model C3 lawn chalr have to be, at minimum, In order to Justify retaining the product? (Hint Set this up as a break-even problem, but Include only the relevant costs from part (1).) (Round "Contrlbution margin ratio" to 2 decimal places and final answer to the nearest whole number.)