Wendy Carlisle is the owner and managing director of Urban Outside Furniture, Ltd., a South African company that makes museum-quality reproductions of antique outdoor furniture. Ms. Carlisle would like advice concerning the advisability of eliminating the model C3 lawn chair. These lawn chairs have been among the company's best-sellgpodcts, but they seem to be unprofitable. A condensed absorption costing income statement for the company and for the model C3 lawn chair for the quarter ended June 30 follows All Products R 2,980,000 Model C3 Lawn chair R 308,000 Sales Cost of goods sold Direct materials Direct labor Fringe benefits (20% of direct labor) Variable manufacturing overhead Building rent and maintenance Depreciation 688,000 137,600 28,800 30,800 75,800 767,000 122,800 72,800 14,560 4,400 4,800 19,900 1,728,000 239,260 Total cost of goods sold Gross margin Selling and administrative expenses 1,252,000 68,740 Product managers' salaries Sales commissions (5% of sales) Fringe benefits (15% of salaries and commissions) Shipping General administrative expenses 83,000 149,000 34,800 128,000 464,800 10,000 15,400 3,810 14,130 48,800 Total selling and administrative expenses 859,600 92,140 Net operating income (loss) R 392,400 R (23,400) The currency in South Africa is the rand, denoted here by R