Please solve the new budgeted product-line and total company income statements using the above method of allocating S, G & A costs.

Travel Outfitters operates a large outdoor clothing and equipment store with Store manager Alex Baxter gathers the following information regarding the three main product lines: clothing, equipment, and shoes. Travel Outfitters three product lines: operates at capacity and allocates selling, general, and administration (S, G Click the icon to view the product line information.) & A) costs to each product line using the cost of merchandise of each product line. The company wants to optimize the pricing and cost For 2017, Travel Outfitters budgets the following selling, general, and management of each product line and is wondering if its accounting system administration costs: is providing it with the best information for making such decisions. (Click the icon to view the selling, general, and administration costs.) Read the requirements. Requirement 1. Suppose Travel Outfitters uses cost of merchandise to allocate all S, G & A costs. Prepare budgeted product-line and total company income statements. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing Equipment Shoes Total Revenues $ 1,360,000 $ 1,790,000 $ 810,000 $ 3,960,000 Cost of merchandise 808,500 1,200,500 441,000 2,450,000 Selling, general and administrative costs 436,590 648,270 238,140 1,323,000 Total costs 1,245,090 1,848,770 679,140 3,773,000 $ 114,910 $ (58,770) $ 130,860 $ 187,000 Operating income (loss) Requirement 2. Identify an improved method for allocating costs to the three product lines. Explain. Use the method for allocating S, G & A costs that you propose to prepare new budgeted product line and total company income statements. Compare your results to the results in requirement 1. An improved method for allocating costs to the three product lines is activity based costing . This method is more appropriate because of the variety of products and large dollar value of indirect costs. Begin by identifying the most appropriate cost driver for each cost category. Select the best explanation for the use of each cost driver. (Use the cost of merchandise if the expense is not tied to any of the other cost drivers.) (Click the icon to view the explanation responses.) Explanation Cost driver Number of purchase orders D Expense Purchasing department expense Receiving department expense Customer support expense Number of boxes received B Revenue dollars E Rent F Square feet of store space Revenue dollars E General store advertising Store manager's salary Cost of merchandise G Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Prepare a new budgeted product-line and total company income statements using the above method of allocating S, G & A costs. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign to enter losses.) Travel Outfitters Budgeted Income Statement For the Year Ended December 31, 2017 Clothing Equipment Shoes Total Revenues Cost of merchandise Selling, general and administrative costs Total costs Operating income (loss) Data Table i Requirement Sto Fo Re Travel Outfitters Selling General, and Administration (S, G, & A) Costs For the Year Ended December 31, 2017 Purchasing department expense Receiving department expense Customer support expense (cashiers and floor employees) Rent 1. Suppose Travel Outfitters uses cost of merchandise to allocate all S, G & A costs. Prepare budgeted product-line and total company income statements. 2. Identify an improved method for allocating costs to the three product lines. Explain. Use the method for allocating S, G & A costs that you propose to prepare new budgeted product-line and total company income statements. Compare your results to the results in requirement 1. (Customer support and advertising have been linked very closely with store sales.) 3. Write a memo to Travel Outfitters management describing how the improved system might be useful for managing the store. $ 334,800 273,000 198,000 340,000 bf allo General store advertising Print Done 79,200 98,000 Store manager's salary $ 1,323,000 Total Print Done Cost of merchandise Selling, general and administrative costs Travel Outfitters Budgeted Product-Line Information For the Year Ended December 31, 2017 Clothing Equipment Shoes Total Revenues $ 1,360,000 $ 1,790,000 $ 810,000 $ 3,960,000 Cost of merchandise $ 808,500 $ 1,200,500 $ 441,000 $ 2,450,000 Number of purchase orders 220 130 190 540 Total costs Operating income (loss) Enter any number in the edit fields and then click Check Answer. placed ? 460 220 370 1,050 Number of boxes received Square feet of store space parts remaining 4,300 14,000 1,700 20,000 (