Studemeir Paint & Floors (SPF) has experienced net operating losses in its Other Flooring Products line during the last few periods. SPFs management team thinks that the store will improve its profitability if it discontinues the Other Flooring Products line. The operating results from the most recent period are: Paint and Paint Supplies Carpet Other Flooring Products Sales $ 421,300 $ 219,500 $ 171,000 Cost of goods sold 168,000 164,000 138,250 SPF estimates that store support expenses are approximately 20% of revenues. Harish Rana, SPFs controller, states that while every sale has one purchase order, not every sales dollar requires or uses the same amount of store support activities. He conducts a preliminary investigation and his results and analysis are as follows: Activity (cost driver) Paint and Paint Supplies Carpet Other Flooring Products Order processing (number of purchase orders) 429 120 100 Receiving (number of deliveries) 52 100 70 Customer support (hours required per sale) 0.50 8.0 0.78 Harish estimates activity-cost rates for each activity as follows: Order processing $ 150 per purchase order Receiving 180 per delivery Customer support 20 per hour Required: 1. Prepare a product-line profitability report for SPF under the current costing system. 2. Prepare a product-line profitability report for SPF using the ABC information the controller provides.

Prepare a product-line profitability report for SPF under the current costing system. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. 0.2134 should be entered as 21.34%).)

	Paint & Paint Supplies		Carpet		Other Flooring Products
Operating income (loss)
Operating margin (loss)		%		%		%

Prepare a product-line profitability report for SPF using the ABC information the controller provides. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. 0.2134 should be entered as 21.34%). Round all other answers to nearest whole dollar.)

	Paint & Paint Supplies		Carpet		Other Flooring Products
Store support:
Total store support
Operating income (loss)
Operating margin (loss)		%		%		%

• Required 1
• Required 2