Question 2. Henderson Supermarkets (HS) Total 23 marks Henderson Supermarkets (HS) 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: Ordering Delivery and receipt of merchandise Shelf-stocking Customer support and assistance $102 per purchase order $ 78 per delivery $ 21 per hour $ 0.22 per item sold 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 $59,500 $36,000 $10,800 $66,000 $48,000 $14,400 $51,000 $34,000 $10,200 Financial data Revenues Cost of goods sold Store support Activity-area usage (cost-allocation base) Ordering (purchase orders) Delivery (deliveries) Shelf-stocking (hours) Customer support (items sold) 190 13,500 180 17,500 30 40 8,000 Under its simple costing system, HS allocated support costs to products at the rate of 30% of cost of goods sold. Required: 1. Use the simple costing system to prepare a product-line profitability report for HS. 6 marks 2. Use the ABC system to prepare a product-line profitability report for HS. 10 marks 3. What new insights does the ABC system in requirement 2 provide to HS managers? Provide ranking of products in terms of their profitability both under simple costing system and under ABC. 7 marks