1. Best Buy Co., Inc. and Target Corporation allocate their retail operating costs using activity-based costing. The following table summarizes the costs and cost drivers:

Department	Best Buy Total Cost ($)	Cost Driver	Cost Driver Quantity	Target Total Cost ($)
Electronics	$7,500,000	Sales revenue	$75,000,000	$6,800,000
Apparel	$5,000,000	Floor area (sq. ft.)	1,000,000 sq. ft.	$4,500,000
Home Goods	$3,000,000	Number of SKUs	20,000 SKUs	$2,500,000
Total	$15,500,000			$13,800,000

• Best Buy generated $80,000,000 in electronics sales revenue, has 1,200,000 sq. ft. of apparel floor area, and offers 25,000 home goods SKUs.
• Allocate retail operating costs per dollar of sales revenue, per sq. ft. of floor area, and per SKU for Best Buy and Target using activity-based costing.
• Discuss how differences in operating costs per dollar of sales impact profitability and competitive pricing strategies for Best Buy Co., Inc. and Target Corporation.