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 on sales 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 $800,000. Overhead is allocated to products based on direct labor cost. Data for year 1 show the following: Chairs DesksSales revenue $ 1,150,000 $ 2,105,000 Direct materials 584,000 800,000 Direct labor 160,000 340,000 Required:a-1. Based on the CFO's new policy, calculate the profit margin for both chairs and desks.Profit Margin (%)Chairs 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 $650,000. 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?

Answer:

McNulty, Inc.

                                  Chairs         Desks

a) Profit margin (%)    6.33%        31.36%

b) The estimated margin for desks in year 2 is:

= 17.6%

Explanation:

a) Data and Calculations:

Expected gross profit margin on cost = 20%

Manufacturing overhead for year 1 = $800,000

                                Chairs         Desks         Total

Sales revenue $ 1,150,000 $ 2,105,000   $ 3,255,000

Direct materials    584,000      800,000       1,384,000

Direct labor           160,000      340,000         500,000

Overhead             337,572       462,428         800,000

Total costs        $1,081,572   $1,602,428   $2,684,000

Gross Profit         $68,428      $502,572       $571,000

Profit margin        6.33%            31.36%            21.27%

Margin (%) = Gross profit/Total costs * 100

Allocation of Manufacturing Overhead based on direct labor cost:

Chairs = $337,572 ($584,000/$1,384,000 * $800,000)  

Desks = $462,428 ($800,000/$1,384,000 * $800,000)

Year 2:

                                       Desks        

Sales revenue         $ 2,105,000

Direct materials            800,000

Direct labor                   340,000

Overhead                     650,000

Total costs              $ 1,790,000

Gross Profit                $315,000

Profit margin                17.6%

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If investing $1,000 for a year, how frequently is simple interest paid on the principal investment?
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The use of planning techniques is an example of

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A
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B
the business is subject to little government regulation.
с
owners have limited liability for debt.
D
owners have direct and immediate control over daily management of the business.

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Which of these trainings does the hospitality certification provide?
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($ in millions)
Discount rate, 10%
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Accumulated benefit obligation, December 31 450
Cash contributions to pension fund, December 31 185
Benefit payments to retirees, December 31 61
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Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the year ended December 31.

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1.15
This financial statement reflects the flow of money in and out of a business.
occeed cash flow
Stato
Total: 15 marks
Question 2​

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Buildings and improvements $195
Prepaid expenses and other current assets 165
Allowance for doubtful accounts 39
Other noncurrent assets 210
Accumulated amortization (other intangibles) 819
Cash and cash equivalents 636
Goodwill 469
Machinery, equipment, and software 418
Accumulated depreciation 417
Inventories 300
Tools, dies, and molds 71
Other intangibles 1,359
Land and improvements 15
Accounts receivable 641

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As of January 31 As of February 28
Inventory account balances:
Raw materials inventory $42,000 $30,000
Work in process inventory $9,200 $20,600
Finished goods $56,000 $33,500
Additional information for the month ended February 28:
Raw materials purchased $198,000
Factory payroll $150,000
Actual factory overhead costs:
Indirect materials $15,000
Indirect labor $34,500
Other overhead costs $13,500
Sales $1,100,000
Predetermined overhead rate (based on direct labor costs) = 55% of DL costs
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