Granger Supermarkets (GS)operates at capacity and decides to apply ABC analysis to three product lines: baked goods, milk and fruit juice, and frozen foods. It identifies four activities and their activity cost rates as follows:

The revenues, cost of goods sold, store support costs, activities that account for the store support costs, and activity-area usage of the three product lines are as follows:

Baked Goods	Milk and Fruit Juice	Frozen Products
Financial data
Revenues	$58,500	$67,500	$51,000
Cost of goods sold	$37,000	$45,000	$36,000
Store support	$11,100	$13,500	$10,800
Activity-area usage (cost-allocation base)
Ordering (purchase orders)	35	30	20
Delivery (deliveries)	85	45	30
Shelf-stocking (hours)	175	155	25
Customer support (items sold)	12,000	16,000	7,000

Under its simple costing system, GS allocated support costs to products at the rate of 30% of cost of goods sold.

Ordering Delivery and receipt of merchandise Shelf-stocking Customer support and assistance $98 per purchase order $81 per delivery $22 per hour $0.18 per item sold 1. Use the simple costing system to prepare a product-line profitability report for GS. 2. Use the ABC system to prepare a product-line profitability report for GS. 3. What new insights does the ABC system in requirement 2 provide to GS managers