Pet City operates a pet supply superstore in Atlanta with three main product lines: food, toys, and Store manager Jack Black gathers the following information regarding the three product lines: accessories. Pet City allocates common selling, general, and administration (SG&A) costs to each product (Click the icon to view the product line information.) Tine using the 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 For 2020. Pet City budgets the folleywing selling, general, and administration costs: and cost management of each product line and is wondering whether its accounting system is providing it Click the icon to view the selling, general, and administration costs.) with the best information for making such decisions. 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 allocating common SG&A expenses using cost of merchandise. Food Toys Accessories Total Direct SG&A costs: Department manager salaries Common SG&A costs allocatod 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 Data Table - X i Data Table va Pet City accesso line usir 02 SG&A it 0 and cos with the Pet City Product-Line Information for the Year Ended December 31, 2020 en Food 218,300 Require product or each Pet City SG&A Costs for the Year Ended December 31, 2020 $ Purchasing department expense Receiving department expense Selling expense Rent Store manager's salary Revenues S Toys Accessories Total 5,850,000 $ 2,340,000 S 3.510,000 S 11.700.000 3,250,000 $ 1,300,000 5 1.950,000 S 6.500.000 156,400 Cost of merchandise S 936,000 Start by M S 62,000 $ 70,000 S 58,000 S 190.000 514.800 590 295 2,065 2.950 Direct 1 Salary of department manager Number of purchase orders placed Number of boxes received Square feet of store space 1,840 920 234.000 59,400 6,440 9.200 Utilities Comme 12,100 2,900 4,800 19.800 $ 2.118,900 Total Total S In this si Print Done bf store Print Done Choose from any list or enter any number in the input fields and then continue to the next question. Pet Clty operates a pet supply superstore in Atlanta with three main product lines: food, toys, and Store manager Jack Black gathers the following Information regarding the three product lines: accessories, Pet City allocates common selling, general, and administration (SG&A) costs to each product Click the icon to view the product line information.) line using the cost of merchandise of each product line. Department manager salaries, while considered SG&A, are direct and are assigned directly to cach product line. The company wants to optimize the pricing For 2020, Pet City budgets the following selling, general, and administration costs: and cost management of each product line and is wondering whether its accounting system is providing it (Click the icon to view the selling, general, and administration costs.) with the best information for making such decisions. Read the requirements. 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, $X.XX.) Pet City Budgeted Income Statement For the Year Ended December 31, 2020 Toys Food Accessories Total Revenues Cost of merchandise Grass margin Choose from any list or enter any number in the input fields and then continue to the next question. 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 (SG&A) costs to each product line using the 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 of each product line and is wondering whether its accounting system is providing it with the best information for making such decisions. Store manager Jack Black gathers the following information regarding the three product lines: Click the icon to view the product line information.) For 2020, Pet City budgets the following selling, general, and administration costs: (Click the icon to view the selling, general, and administration costs.) Read the requirements Cost of merchandise Grass margin Selling, general, & administrative casts Operating income (loss) Square feet of store space Profit (loss) per square laat 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 store space for each product line. Compare your results to the results in requirement 1. 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 Sellina expense Receiving department expense Selling expense Rent Store manager's salary Utilities Calculate the each of the cost driver rates need to allocate common SG&A costs under the method you have identified for this requirement. (Round all dollar amounts to the nearest cent, $X.XX. Enter any rates as a percentage to two decimal places, X.XX.) = Cost driver rate Purchasing = Cost driver rate Purchasing Receiving | | | | | Selling Rent = Store manager's salary Utilities : Start by determining the total selling, general, and administrative (SG&A) expenses allocated to each department and in total when allocating common SG&A expenses using the cost drivers you identified above. (Use the cost driver rate amounts you determined in the preceding step for your allocation computations. Round all amounts you enter into the table below to the nearest whole dollar.) Read the requirements. Start by determining the total selling, general, and administrative (SG&A) expenses allocated to each department and in total when allocating common SG&A expenses using the cost drivers you identified above. (Use the cost driver rate amounts you determined in the preceding step for your allocation computations. Round all amounts you enter into the table below to the nearest whole dollar.) Food Toys Accessories Total Direct SG&A costs: Department manager salaries Common SG&A costs allocated: Purchasing department expense Receiving department expense Selling expense Rent Read the requirements. Selling expense Rent Store manager's salary Utilities 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 the method you proposed in this requirement. 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, $X.XX.) Pet City Budgeted Income Statement 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) Operating income (loss) Square feet of store space Profit (loss) per square foot Compare your results to the results in requirement 1 on a profit/loss per square foot basis. Review the income statement from requirement 1. Comparing the product line income statements in requirements 1 and 2, it appears that is/are more profitable per square foot and Vis/are less profitable per square foot under the system used in requirement 2 compared to the simple system. These results are V. The reason is that the departments use Comparing the product line income statements in requirements 1 and 2, it appears that is/are more profitable per square foot and is/are less profitable per square foot under the system used in requirement 2 compared to the simple system. These results are V. The reason is that the departments use Requirement 3. What recommendations would you make to the store manager based on the results of the activity-based costing analysis? The recommendation is that the organization switch to method. With this method, the product lines are assigned indirect costs based on their The current accounting technique because it V. By adopting management can evaluate the costs of operating the three product lines and make more informed > pricing and product mix decisions. Choose from any list or enter any number in the input fields and then continue to the next