please help me 678729

TASK 2: Dropping or Retaining a Product Henry Douglas is the owner and managing director of Heritage Furniture, Ltd., a South African company that makes museum quality reproductions of antique outdoor furniture. Ms. Douglas would like advice concerning the advisability of eliminating the model C3 lawn chair. These lawnchairs have been among the company’s best selling products, but they seem to be unprofitable. A condensed absorption costing income statement for the company and for the model C3 lawnchair for the quarter ended June 30 follows: All Products Model C3 Lawnchair Sales. . . . . . . . . . . . . . . . . . . . . R2,900,000 R300,000 Cost of goods sold: Direct materials. . . . . . . . . . . . . . . . . 759,000 122,000 Direct labor . . . . . . . . . . . . . . . . . . . . 680,000 72,000 Fringe benefits (20% of direct labor) . . . . . 136,000 14,400 Variable manufacturing overhead . . . . . . . . 28,000 3,600 Building rent and maintenance . . . . . . 30,000 4,000 Depreciation . . . . . . . . . . . . . . . . . . . 75,000 19,100 Total cost of goods sold . . . . . . . . . 1,708,000 235,100 Gross margin. . . . . . . . . . . . . . . . . . 1,192,000 64,900 Selling and administrative expenses: Product managers’ salaries . . . . . . . . . . . 75,000 10,000 Sales commissions (5% of sales). . . .. . . . 145,000 15,000 Fringe beneftts (20% of salaries and commissions) 44,000 5,000 Shipping. . . . . . . . . . .. . . . . . . . . . . . 120,000 10,000 General administrative expenses . . . . . . . 464,000 48,000 Total selling and administrative expenses . . 848,000 88,000 Net operating income (loss) . . . . . . . . . .. R344,000 …