Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor 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 $660,000. 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? Req A1 Chairs $1,046,500 585,000 130,000 Complete this question by entering your answers in the tabs below. Reg A2 Chairs Desks Desks $1,950,000 810,000 300,000 Req B Based on the CFO's new policy, calculate the profit margin for both chairs and desks. Profit Margin % %
Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following. Sales revenue Direct materials Direct labor 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 $660,000. 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? Req A1 Chairs $1,046,500 585,000 130,000 Complete this question by entering your answers in the tabs below. Reg A2 Chairs Desks Desks $1,950,000 810,000 300,000 Req B Based on the CFO's new policy, calculate the profit margin for both chairs and desks. Profit Margin % %
Cornerstones of Cost Management (Cornerstones Series)
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ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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Chapter2: Basic Cost Management Concepts
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Problem 13E: Wyandotte Company provided the following information for the last calendar year: During the year,...
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Question
![McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot 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.
Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1
show the following.
Sales revenue
Direct materials
Direct labor
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 $660,000. 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?
Req A1
Complete this question by entering your answers in the tabs below.
Chairs
$1,046,500
585,000
130,000
Req A2
Chairs
Desks
Desks
$1,950,000
810,000
300,000
Profit Margin
%
%
Req B
Based on the CFO's new policy, calculate the profit margin for both chairs and desks.
< Req A1
Req A2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b7abcd0-34a8-4fb1-bbfc-91ff83baf1be%2F28b2208e-35cf-4274-afd1-2b2c1653a77d%2F83lp3pd_processed.png&w=3840&q=75)
Transcribed Image Text:McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot 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.
Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1
show the following.
Sales revenue
Direct materials
Direct labor
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 $660,000. 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?
Req A1
Complete this question by entering your answers in the tabs below.
Chairs
$1,046,500
585,000
130,000
Req A2
Chairs
Desks
Desks
$1,950,000
810,000
300,000
Profit Margin
%
%
Req B
Based on the CFO's new policy, calculate the profit margin for both chairs and desks.
< Req A1
Req A2 >
![McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot 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.
Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1
show the following.
Sales revenue
Direct materials
Direct labor
Chairs
$1,046,500
585,000
130,000
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 $660,000. 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?
Req A1
Complete this question by entering your answers in the tabs below.
Reg A2
Desks
$1,950,000
810,000
300,000
Req B
Estimated margin for desks - Year 2
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 $660,000. 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).)
%
< Req A2
Req B >
Show less A](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b7abcd0-34a8-4fb1-bbfc-91ff83baf1be%2F28b2208e-35cf-4274-afd1-2b2c1653a77d%2F54ntn_processed.png&w=3840&q=75)
Transcribed Image Text:McNulty, Inc., produces desks and chairs. A new CFO has just been hired and announces a new policy that if a product cannot 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.
Manufacturing overhead for year 1 totaled $645,000. Overhead is allocated to products based on direct labor cost. Data for year 1
show the following.
Sales revenue
Direct materials
Direct labor
Chairs
$1,046,500
585,000
130,000
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 $660,000. 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?
Req A1
Complete this question by entering your answers in the tabs below.
Reg A2
Desks
$1,950,000
810,000
300,000
Req B
Estimated margin for desks - Year 2
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 $660,000. 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).)
%
< Req A2
Req B >
Show less A
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