4) Best for Less is a retail chain of supermarkets. For many years, it has used gross margin (selling price minus cost of goods sold) to guide it in deciding on which products to emphasize or deemphasize. And for many years, it has not allocated any costs to products. It changed its internal reporting system recently, and goods-handling costs are now allocated to individual products on the basis of cubic volume. (Most products are delivered to shelves in cartons. A detailed study showed that cubic volume was the major driver of Best for Less goods-handling costs.) The following data focus on four products in April 2007: Cost of Goods Revenue Purchased Volume Product per Carton (cubic metres) Breakfast cereal S 82 $56 24 Cheese product 64 52 12 Paper towels 36 26 24 Toothpaste 74 12 Each supermarket has a weekly report on product contribution: per Carton 100 Revenue Cost of goods sold Gross margin (GM) Goods-handling costs Product contribution (PC) $ R R-C D SGM-D The April 19_7 goods-handling cost allocation rate is $0.50 per cubic metre. REQUIRED 1. Compute the gross margin for each of the four products. Rank these four products using their gross margin percentage. 2. Compute the product contribution for each of the four products. Rank these four products using the product contribution to revenue percent- age. 3. Compare your ranking in requirement 2 with that in requirement 1. How is the requirement 2 analysis useful to Best for Less management