Data Table a. OrderingPlacing of orders for purchases b. Delivery Physical delivery and receipt of merchandise C. Shelf-stocking Stocking of merchandise on store shelves, including ongoing restocking d. Customer support-Assistance to customers, including check out and bagging e. Produce monitoring - Constantly checking on the stacking and freshness of produce The cost drivers for each activity are as follows: Ordering Delivery Shelf-stocking Customer support Produce monitoring Number of purchase orders Number of deliveries Hours of stocking time Number of items sold Direct trace to the Produce Department O Data Table bmpany is planning an expansion of its store In addition B.300 - tment to be the most profitable so the 700.000 cost-allocation ctivity-based A Requirements Packaged n product gets Produce Food Meat Total Number of purchase orders 1,440 3.310 1.340 6,090 1. The starting point of your analysis is to determine Number of deliveries 1,170 8,700 2.130 12.000 existing cost accounting system. Compute the op ht using operating income as a percent of sales for each d Hours of shelf-stocking 215 2,180 825 3,220 existing system. Use this information to assess the Items sold 50,400 441,500 113,600 605,500 of sales of each of the three departments. 2. Quito asks you next to develop product costs usin accounting system. You determine that there are Print Done a different cost driver to be used as a cost-allocati (Click the loon to view the cost drivers and co You have determined the following information about the cost driver ses to show an operating loss or an operating loss as a percent of sales. (Click the icon to view the data.) Data Table The total cost of each activity was as follows: (Click the icon to view the costs.) Using these data and activity-based costing, calculate the operating and operating income as a percent of sales for each product. (Ford Ordering 66,990 note that each purchase order costs 66.990 / 6,090 = 11 to proce Delivery 3. Propose a strategy for expansion. Which information, that based on 158,000 costing system or that based on the activity-based costing system, Shell-stocking 115,920 useful? Why? What additional information would you like to have be making a more definitive recommendation on an expansion strategy Customer support 302,750 Produce monitoring 58,340 Print 700,000 Dona Total Print Done 190,000 490,90 Gross margin Allocation of support costs Operating income (loss) Operating income (loss) as a percent of sales Choose from any list or enter any number in the input fields and then continue to the next question. Print Done ? Save for Later Supersol is a grocery company with stores throughout Spain. Suppose the company is planning an expansion of its store in central Madrid. A preliminary analysis has shown the packaged food department to be the most profitable, so the company plans to increase its space the most. Assume that the Madrid store has just three departments: produce, packaged food, and meat. The most recent annual report for the store showed sales of 3,763,300, which generated a gross margin of C963,300. Sales and gross margins of the three departments were as follows: B (click the icon to view the sales and gross margins.) In addition to cost of products sold, the store has 700,000 of support costs, so operating income is 963,300 - 700,000 = 263,300. Supersol currently uses an accounting system that uses cost of products sold as a cost-allocation base for allocating support costs. Ernesto Quito, controller of Supersol, recently attended a seminar on activity-based costing. He suggests that Supersol management should undertake further analysis before deciding which product gets the largest increase in space in the expansion. He has asked you, his assistant, to lead this analysis. Read the requirurronts Requirement 1. The starting point of your analysis is to determine product profitability under the existing cost accounting system. Compute the operating income and the operating income as a percent of sales for each department using Supersol's existing system. Use this information to assess the relative profitability per euro of sales of each of the three departments. Start by determining the formula needed to compute indirect cost ratos, then enter the amount to calculate the indirect cost rate under the company's existing cost system. (Round the rate to two decimal places, .xx.) Indirect cost allocation rate Total indirect support Now compute the operating income and the operating income as a percent of sales for each department using Supersol's existing system. (Use a minus sign or parentheses to show an operating loss or an operating loss as a percent of sales. Round the operating income (loss) as a percent of sales to two decimal places, X.XX%.) Packaged Food Produce Meat Revenues 750,000 560,000 1,330,900 840,000 1,682,400 1,400,000 Cost of products sold Gross margin 190,000 490,900 282,400 Allocation of support costs Operating income (loss) Operating Income (loss) as a percent of sales % % % Choose from any list or enter any number in the input fields and then continue to the next question. ? Save for Later Supersol is a grocery company with stores throughout Spain. Suppose the company is planning an expansion of its store in addition to cost of products sold, the store has 700,000 of support costs, so operating income is 963,300 - in central Madrid. A preliminary analysis has shown the packaged food department to be the most profitable, so the 700,000 = 283,300. Supersol currently uses an accounting systern that uses cost of products sold as a cost-allocation company plans to increase its space the most. Assume that the Madrid store has just three departments: produce, base for allocating support costs. Ernesto Quito, controller of Supersol, recently attended a seminar on activity-based packaged food, and meat. The most recent annual report for the store showed sales of 3,763,300, which generated a costing. He suggests that Supersol management should undertake further analysis before deciding which product gets gross margin of C963,300. Sales and gross margins of the three departments were as follows: the largest increase in space in the expansion. He has asked you, his assistant to lead this analysis. B Click the icon to view the sales and gross margins.) Read the requirements Now compute the operating income and the operating income as a percent of sales for each department using the activity-based data. (Complete all answer boxes. Use a minus sign or parentheses to show an operating loss or an operating loss as a percent of sales. Round the operating income (loss) as a percent of sales to two decimal places, X.XX%.) Packaged Food Meat Revenues Produce 750.000 560,000 1,330,900 840,000 1,682,400 1,400,000 190.000 490,900 282,400 Cost of products sold Gross margin Allocation of support costs: Ordering Delivery Shelf-stocking Customer support Produce monitoring Operating income (loss) Operating incornis (loss) as a ) percent of sales % % % Choose from any list or enter any number in the input fields and then continue to the next question. ? Save for Later Supersol is a grocery company with stores throughout Spain. Suppose the company is planning an expansion of its store in addition to cost of products sold, the store has 700,000 of support costs, so operating income is 963,300 - in central Madrid. A preliminary analysis has shown the packaged food department to be the most profitable, so the 700,000 = 263,300. Supersol currently uses an accounting system that uses cost of products sold as a cost-allocation company plans to increase its space the most. Assume that the Madrid store has just three departments: produce base for allocating support costs. Emesto Quilo, controller of Supersol, recently attended a seminar on activity-based packaged food, and meat. The most recent annual report for the store showed sales of 3,763,300, which generated a costing. He suggests that Supersol management should undertake further analysis before deciding which product gets gross margin of 963,300. Sales and gross margins of the three departments were as follows: the largest increase in space in the expansion. He has asked you, his assistant, to lead this analysis. (Click the icon to view the sales and gross margins.) Read the requirements percent of sales % % department appears to be the most profitable relative to the amount of sales from that department and the department appears to be the least profitable relative to the amount of Under the ABC cost system the sales. Requirement 3. Propose a strategy for expansion. Which information, that based on the current costing system or that based on the activity-based costing syster, is most useful? Why? What additional information would you like to have before making a more definitive recommendation on an expansion strategy? The system is generally more accurate because it better allocates costs on a cause effect basis. The of the support costs. The system recognizes this and thus allocates department department uses more support activities (relative to its sales) than the other departments, thus it costs to the department Based on the costs allocated under this system, Supersol should considering causes expanding the What additional information would you like to have before making a more definitive recommendation on an expansion strategy? Select which additional piece(s) of information is(are) needed to assist in making the best expansion decision: O A. Fixed and variable costs. Even the activity-based costing system allocates all costs on a per unit basis. Fixed costs are not separated from variable costs, so a contribution margin cannot be determined. This may be ok for long-term strategic decisions, however, it will not provide a short-term prediction of the effect of the expansion. OB. Market demand. The activity-based costs can be used to estimate the impact of different sales levels, but we need to know how much added sales will result from the expansion of capacity in each department. OC. Product interactions. Will increased (or decreased) space for one department affect the sales of another department? OD. Opportunities for re-engineering. The activity-based costing numbers provide costs for providing each type of support activity. It will help determine whether these activities are worth their cost or if any of them might be accomplished more efficiently. The high costs of activities for the packaged food department might be reduced by re-engineering the processes, thereby increasing the profitability of the department E. Capacity utilization by each department. For expansion decisions, management should first expand the department that gives the highest contribution marain Der square foot for der linear shelf foot or other capacity measure). Choose from any list or enter any number in the input fields and then continue to the next question. ? Data Table a. OrderingPlacing of orders for purchases b. Delivery Physical delivery and receipt of merchandise C. Shelf-stocking Stocking of merchandise on store shelves, including ongoing restocking d. Customer support-Assistance to customers, including check out and bagging e. Produce monitoring - Constantly checking on the stacking and freshness of produce The cost drivers for each activity are as follows: Ordering Delivery Shelf-stocking Customer support Produce monitoring Number of purchase orders Number of deliveries Hours of stocking time Number of items sold Direct trace to the Produce Department O Data Table bmpany is planning an expansion of its store In addition B.300 - tment to be the most profitable so the 700.000 cost-allocation ctivity-based A Requirements Packaged n product gets Produce Food Meat Total Number of purchase orders 1,440 3.310 1.340 6,090 1. The starting point of your analysis is to determine Number of deliveries 1,170 8,700 2.130 12.000 existing cost accounting system. Compute the op ht using operating income as a percent of sales for each d Hours of shelf-stocking 215 2,180 825 3,220 existing system. Use this information to assess the Items sold 50,400 441,500 113,600 605,500 of sales of each of the three departments. 2. Quito asks you next to develop product costs usin accounting system. You determine that there are Print Done a different cost driver to be used as a cost-allocati (Click the loon to view the cost drivers and co You have determined the following information about the cost driver ses to show an operating loss or an operating loss as a percent of sales. (Click the icon to view the data.) Data Table The total cost of each activity was as follows: (Click the icon to view the costs.) Using these data and activity-based costing, calculate the operating and operating income as a percent of sales for each product. (Ford Ordering 66,990 note that each purchase order costs 66.990 / 6,090 = 11 to proce Delivery 3. Propose a strategy for expansion. Which information, that based on 158,000 costing system or that based on the activity-based costing system, Shell-stocking 115,920 useful? Why? What additional information would you like to have be making a more definitive recommendation on an expansion strategy Customer support 302,750 Produce monitoring 58,340 Print 700,000 Dona Total Print Done 190,000 490,90 Gross margin Allocation of support costs Operating income (loss) Operating income (loss) as a percent of sales Choose from any list or enter any number in the input fields and then continue to the next question. Print Done ? Save for Later Supersol is a grocery company with stores throughout Spain. Suppose the company is planning an expansion of its store in central Madrid. A preliminary analysis has shown the packaged food department to be the most profitable, so the company plans to increase its space the most. Assume that the Madrid store has just three departments: produce, packaged food, and meat. The most recent annual report for the store showed sales of 3,763,300, which generated a gross margin of C963,300. Sales and gross margins of the three departments were as follows: B (click the icon to view the sales and gross margins.) In addition to cost of products sold, the store has 700,000 of support costs, so operating income is 963,300 - 700,000 = 263,300. Supersol currently uses an accounting system that uses cost of products sold as a cost-allocation base for allocating support costs. Ernesto Quito, controller of Supersol, recently attended a seminar on activity-based costing. He suggests that Supersol management should undertake further analysis before deciding which product gets the largest increase in space in the expansion. He has asked you, his assistant, to lead this analysis. Read the requirurronts Requirement 1. The starting point of your analysis is to determine product profitability under the existing cost accounting system. Compute the operating income and the operating income as a percent of sales for each department using Supersol's existing system. Use this information to assess the relative profitability per euro of sales of each of the three departments. Start by determining the formula needed to compute indirect cost ratos, then enter the amount to calculate the indirect cost rate under the company's existing cost system. (Round the rate to two decimal places, .xx.) Indirect cost allocation rate Total indirect support Now compute the operating income and the operating income as a percent of sales for each department using Supersol's existing system. (Use a minus sign or parentheses to show an operating loss or an operating loss as a percent of sales. Round the operating income (loss) as a percent of sales to two decimal places, X.XX%.) Packaged Food Produce Meat Revenues 750,000 560,000 1,330,900 840,000 1,682,400 1,400,000 Cost of products sold Gross margin 190,000 490,900 282,400 Allocation of support costs Operating income (loss) Operating Income (loss) as a percent of sales % % % Choose from any list or enter any number in the input fields and then continue to the next question. ? Save for Later Supersol is a grocery company with stores throughout Spain. Suppose the company is planning an expansion of its store in addition to cost of products sold, the store has 700,000 of support costs, so operating income is 963,300 - in central Madrid. A preliminary analysis has shown the packaged food department to be the most profitable, so the 700,000 = 283,300. Supersol currently uses an accounting systern that uses cost of products sold as a cost-allocation company plans to increase its space the most. Assume that the Madrid store has just three departments: produce, base for allocating support costs. Ernesto Quito, controller of Supersol, recently attended a seminar on activity-based packaged food, and meat. The most recent annual report for the store showed sales of 3,763,300, which generated a costing. He suggests that Supersol management should undertake further analysis before deciding which product gets gross margin of C963,300. Sales and gross margins of the three departments were as follows: the largest increase in space in the expansion. He has asked you, his assistant to lead this analysis. B Click the icon to view the sales and gross margins.) Read the requirements Now compute the operating income and the operating income as a percent of sales for each department using the activity-based data. (Complete all answer boxes. Use a minus sign or parentheses to show an operating loss or an operating loss as a percent of sales. Round the operating income (loss) as a percent of sales to two decimal places, X.XX%.) Packaged Food Meat Revenues Produce 750.000 560,000 1,330,900 840,000 1,682,400 1,400,000 190.000 490,900 282,400 Cost of products sold Gross margin Allocation of support costs: Ordering Delivery Shelf-stocking Customer support Produce monitoring Operating income (loss) Operating incornis (loss) as a ) percent of sales % % % Choose from any list or enter any number in the input fields and then continue to the next question. ? Save for Later Supersol is a grocery company with stores throughout Spain. Suppose the company is planning an expansion of its store in addition to cost of products sold, the store has 700,000 of support costs, so operating income is 963,300 - in central Madrid. A preliminary analysis has shown the packaged food department to be the most profitable, so the 700,000 = 263,300. Supersol currently uses an accounting system that uses cost of products sold as a cost-allocation company plans to increase its space the most. Assume that the Madrid store has just three departments: produce base for allocating support costs. Emesto Quilo, controller of Supersol, recently attended a seminar on activity-based packaged food, and meat. The most recent annual report for the store showed sales of 3,763,300, which generated a costing. He suggests that Supersol management should undertake further analysis before deciding which product gets gross margin of 963,300. Sales and gross margins of the three departments were as follows: the largest increase in space in the expansion. He has asked you, his assistant, to lead this analysis. (Click the icon to view the sales and gross margins.) Read the requirements percent of sales % % department appears to be the most profitable relative to the amount of sales from that department and the department appears to be the least profitable relative to the amount of Under the ABC cost system the sales. Requirement 3. Propose a strategy for expansion. Which information, that based on the current costing system or that based on the activity-based costing syster, is most useful? Why? What additional information would you like to have before making a more definitive recommendation on an expansion strategy? The system is generally more accurate because it better allocates costs on a cause effect basis. The of the support costs. The system recognizes this and thus allocates department department uses more support activities (relative to its sales) than the other departments, thus it costs to the department Based on the costs allocated under this system, Supersol should considering causes expanding the What additional information would you like to have before making a more definitive recommendation on an expansion strategy? Select which additional piece(s) of information is(are) needed to assist in making the best expansion decision: O A. Fixed and variable costs. Even the activity-based costing system allocates all costs on a per unit basis. Fixed costs are not separated from variable costs, so a contribution margin cannot be determined. This may be ok for long-term strategic decisions, however, it will not provide a short-term prediction of the effect of the expansion. OB. Market demand. The activity-based costs can be used to estimate the impact of different sales levels, but we need to know how much added sales will result from the expansion of capacity in each department. OC. Product interactions. Will increased (or decreased) space for one department affect the sales of another department? OD. Opportunities for re-engineering. The activity-based costing numbers provide costs for providing each type of support activity. It will help determine whether these activities are worth their cost or if any of them might be accomplished more efficiently. The high costs of activities for the packaged food department might be reduced by re-engineering the processes, thereby increasing the profitability of the department E. Capacity utilization by each department. For expansion decisions, management should first expand the department that gives the highest contribution marain Der square foot for der linear shelf foot or other capacity measure). Choose from any list or enter any number in the input fields and then continue to the next