Rs. 3,87,500 Unit Cost = Rs. 7.75 per unit 50,000 Illustration: 2 Family store wants information about the profitability of individual product lines : Soft drinks, Fresh Produce and Packaged food. Family store provides the following data for the year 2002-03 for each product line : Particulars Soft Drinks Fresh Produce Packaged Food Revenues Rs. 7,93,500 Rs. 21.00,600 Rs. 12,09,900 Cost of goods sold Rs. 6,00,000 Rs. 15,00,000 Rs. 9,00,000 Cost of bottles returned Rs. 10,000 Rs. O Rs. O Number of purchase orders placed 360 840 360 Number of deliveries Received 300 2.190 660 Hours of shelf-stocking Time 540 5,400 2,700 Items sold 1,26,000 11.04,000 3,06,000 240 A Textbook of Financial Cost and Management Accounting Family store also provides the following information for the year 2002-2003 Activity Description of Activity Total Cost Cost - allocation Base Bottles returns Returning of empty-bottles to store Rs. 12.000 Direct tracing to soft-drink line Ordering Placing of orders for purchases Rs. 1,56,000 1,560 purchase orders Delivery Physical delivery and receipt of goods Rs. 2,52,000 3,150 deliveries Shelf stocking Rs. 1,72,800 8,640 hours of Stocking of goods or store shelves ] } shelf-stocking time } Customer support Assistance provided to customers including check-out Rs. 3,07,200 15,36,000 items sold Required (1) Family store currently allocates support cost (all costs other than cost of goods sold) to product lines on the basis of cost of goods sold of each product line. Calculate the operating income and operating income as a % of revenues for each product line. (2) If family store allocate support costs (all costs other than cost of goods sold) to product lines using an Activity-Based Costing System, calculate the operating income as a % of revenues for each product line. (3) Comment on your answers in requirement (1) and (2) (CA, May, 2003)