Exercise $9-26($Static$)$ Reported Costs and Decisions $($LO $9-1)$

Regular Company produces audio equipment, specifically headphones and speakers. A new CEO has just been hired and announces a new policy that if a product cannot earn a markup of at least $25$ percent, it will be dropped. The markup is computed as product gross profit divided by reported product cost.

Manufacturing overhead for year $1$ totaled $$960,000.$ Overhead is allocated to products based on direct materials cost. Data for year $1$ show the following:

$\backslash$table$[[,$Headphones,Speakers$],[$Sales revenue,$$2,156,800,$$$2,058,000$