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Need help with what I did wrong. Thank you. Supermart Food Stores (SFS) has experienced net operating losses in its frozen food products line in
Need help with what I did wrong. Thank you.
Supermart Food Stores (SFS) has experienced net operating losses in its frozen food products line in the last few periods. Management believes that the store can improve its profitability if SFS discontinues frozen foods. The operating results from the most recent period are: Sales Cost of goods sold Frozen Foods Baked Goods $ 141,000 $ 135,000 125,000 99,000 Fresh Produce $ 206,000 143,000 SFS estimates that store support expenses, in total, are approximately 17% of revenues. The controller says that not every sales dollar requires or uses the same amount of store support activities. A preliminary analysis reveals store support activities for these three product lines are: Activity (cost driver) Order processing (number of purchase orders) Receiving (number of deliveries) Shelf-stocking (number of hours per delivery) Customer support (total units sold) Frozen Foods 13 13 6 23,000 Baked Goods 53 69 0.4 37,000 Fresh Produce 97 141 9 74,000 The controller estimates activity-cost rates for each activity follows: $ 84 107 Order processing Receiving Shelf-stocking Customer support 11.00 per purchase order per delivery per hour per item 0.29 Required: 1. Prepare a product-line profitability report for SFS under the current costing system. 2. Prepare a product-line profitability report for SFS using the ABC information the controller provides. X Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a product-line profitability report for SFS using the ABC information the controller provides. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. 0.2134 should be entered as 21.34%). Round all other answers to nearest whole dollar.) Baked Goods $ Frozen Food 141,000 125,000 $ $ 135,000 99,000 36,000 Fresh Produce 206,000 143,000 $ 16,000 $ $ 63,000 Sales Cost of goods sold Gross margin Store support: Order processing Receiving Shelf-stocking Customer support OOO OOO 4,452 7,383 1,092 1,391 66 X 6,670 8,148 15,087 99 X 21,460 4 X 10,730 9,219 Total store support cost Operating income (loss) Operating margin (loss) 22,569 13,431 x 44,794 18,206 X $ 6,781 X $ $ % % %Step by Step Solution
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