Pet City operates a pet supply superstore in Atlanta with three main product lines: food, toys, and accessories. Pet City allocates common selling, general, and administration (SGBA) costs to each product line using the Store manager Jalen Wen gathers the following information regarding the three product lines: cost of merchandise of each product line. Department manager salaries, while considered SG&.A. are direct and are assigned directly to each product line. The company wants to optimize the pricing and cost management Eff(Click the icon to view the product line information.) of each product line and is wondering whether its accounting system is providing it with the best information for making such decisions. OID For 2020, Pet City budgets the following selling, general, and administration costs: If (Click the icon to view the selling, general, and administration costs.) Read the requirements. Requirement 1. Prepare an income statement for Pet City. by product line and in total, allocating common SG&A expenses using cost of merchandise. Calculate the profit per square foot of store space for each product line. Start by determining the total selling, general, and administrative (SG&A) expenses allocated to each department and in total when alloc allocating common SG&.A expenses using cost of merchandise Food Toys Accessories Total Direct SG&A costs: Department manager salaries Common SG&A costs allocated Total SG&A In this step, prepare an income statement for Pet City, by product line and in total, allocating common SG&A expenses using cost of merchandise. In the following step calculate the profit per square foot of store space for each product line. (Use parentheses or a minus sign to enter losses. Round the profit (loss) per square foot to the nearest cent, $XXX) Pet City Budgeted Income Statement For the Year Ended December 31, 2020 Food Toys Accessories Total Revenues Cost of merchandise Gross margin Selling, general, & administrative costs Operating income (loss) Square feet of store space Profit (loss) per square foot Requirement 2. Identify an improved method for allocating costs to the three product lines. Explain. Use the method for allocating SG&A costs that you propose to prepare new product-line income statements. Calculate the profit per square foot of store space for each product line. Compare your results to the results in requirement 1. An improved method for allocating costs to the three product lines is . This method is more appropriate because of the Begin by identifying the most appropriate cost driver for each cost category. Select the best explanation for the use of each cost driver. (Use revenue dollars as the cost driver if the expense is not tied to any of the other cost drivers.) Expense Cost driver Explanation Purchasing department expense Receiving department expense Selling expense Rent Store manager's salaryCalculate the each of the cost amos, X_XX.) Purchasing Selling Rent Store manager's salary Start by deformi anoral, and administrative (SGEA] exper Food Total Dimact SGEA costs: Department manager salaries Common SGBA costs allocated Purchasing department expense Selling expanse Font Store manager's salary Total SGSA In this stop, propane an income statement for Fat City, by product line and in total, allocating common SGSA expo Round the profit (loss) per square foot In the nearest cant, $XXX.) Pat City Budgeted Income Statement For the Year Ended Daoamber $1, 2020 Food Aooaccorig Ravanuns Cost of merchandise Gross margin Selling, general, & administer Operating income (loss] squam font of store space Profit (loss] per square Compare your Comparing the product line in uiraments 1 and 2, it appears that Bible per square foot and W isfare less profitable per square These results are Requirement S. W d on the results of the activity based costing analysis? method. With this method, the product lines are assigned indirect costs bas-x Data table Data table Fet City Pet City Product-Line Information 3GE&A Costs for the Year Ended December 34, 2020 for the Year Ended December 21, 2020 Food Toys Accessories Total Purchasing department expense 3 Revenues 3600000 2160000 1440000 5 7,200,000 Receiving department expense Cost of merchandise S 2000000 5 1200000 5 800000 5 4,000,000 Selling expense Salary of department manager 3 44,000 3 828,000 3 58,000 3 170,000 Rent Number of purchase orders placed 855 570 1,425 2,850 Store manager's salary Number of boxes received 2,000 1,000 7.000 10,000 Utilities Square feet of store space 11,500 2,800 4,200 18,6500 Total : 182,400 160,000 642,000 810,500 144,000 G1,080 1,805,850