Ruff 'N Tumble operates a pet supply superstore in Atlanta with three main product lines: food, toys, and accessories. Ruff ' N Tumble 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 Jalen Brennan gathers the following information regarding the three product lines: (Click the icon to view the product line information.) For 2020, Ruff 'N Tumble budgets the following selling, general, and administration costs: (Click the icon to view the selling, general, and administration costs.) Data table Data table Requirement 1. Prepare an income statement for Ruff 'N Tumble, 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. 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. 3. What recommendations would you make to the store manager based on the results of the activity-based costing analysis? Ruff 'N Tumble operates a pet supply superstore in Atlanta with three main product lines: food, toys, and accessories. Ruff ' N Tumble 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 Jalen Brennan gathers the following information regarding the three product lines: (Click the icon to view the product line information.) For 2020, Ruff 'N Tumble budgets the following selling, general, and administration costs: (Click the icon to view the selling, general, and administration costs.) Data table Data table Requirement 1. Prepare an income statement for Ruff 'N Tumble, 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. 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. 3. What recommendations would you make to the store manager based on the results of the activity-based costing analysis
