Required: 1. Prepare a product-line profitability report for Cleaning Inc. under the current costing system showing operating income and operating margin % for each product line. 2. Using the activity-based costing information provided by the Controller, calculate the activity consumption rate. (Round answer to the nearest two decimal places) 3. Prepare a product-line profitability report for Cleaning Inc. using the activity-based costing information the Controller provides. (Show your work and round final answers to the nearest dollar) 4. What new insights does the activity-based costing system in requirement 3 provide to the Controller? 5. Provide two advantages of using an activity-based costing system over a traditional single activity-based costing system. Reminder: CLEARLY LABEL/NUMBER YOUR ANSWER IN THE BOOKLET PROVIDED. Do not write on this paper (it will not be marked).Question 3 - 20 marks Cleaning Inc. (CI) is a retailer of cleaning products that recently opened in Toronto, Ontario. CI have two product lines: Dishwashers and Washing Machines. Since introducing Dishwashers, CI has experienced net operating losses in the last few quarters. The owner believes that the company can improve its profitability if CI discontinues the selling of Dishwashers and focuses their efforts on only selling Washing Machines. The operating results from the most recent quarter are: Dishwashers Washing Machine Sales $131,000 $249,000 Cost of goods sold $1 10,000 $177,000 The Controller of CI wants to perform a more detailed analysis of support costs before dropping the Dishwasher line. Under the current costing system that the Controller uses, he estimates that the store support costs are 17.5 percent of revenues for each product line (Dishwasher and Washing Machine). 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 two product lines are as follows: Washing Activity Cost Driver Dishwashers Machine Order processing # of purchase orders 20 60 Receiving # of deliveries 16 175 Shelf-stocking # of labor hours 1 3 Customer Support items sold 2,000 20,000 Total costs Order processing $13,500 Receiving $10,000 Shelf-stocking $9,000 Customer Support $34,000 $66,500 Page 6 of 9