Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Studemeir Paint & Floors (SPF) has experienced net operating losses in its Other Flooring Products line during the last few periods. SPF's management team thinks
Studemeir Paint & Floors (SPF) has experienced net operating losses in its Other Flooring Products line during the last few periods. SPF's 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 $ 404,000 171,000 Other Flooring Products $174,500 140,250 Carpet $221,900 160,000 Sales Cost of goods sold SPF estimates that store support expenses are approximately 21% of revenues. Harish Rana, SPF's 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) Order processing (number of purchase orders Receiving (number of deliveries) Customer support (hours required per sale) Paint and Paint Supplies 431 53 0.30 Carpet 114 101 8.0 Other Flooring Products 106 69 0.80 Harish estimates activity-cost rates for each activity as follows: Order processing Receiving Customer support $ 145 per purchase order 184 per delivery 29 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. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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 Sales Cost of goods sold Gross margin $ 0 $ 0 $ 0 Operating income (loss) Operating margin (loss) % % % Required 1 Required 2 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 $ 0 $ 0 $ 0 Store support: 0 Total store support Operating income (loss) Operating margin (loss) % % Cost of goods sold Customer support Order processing Receiving Sales Totol torn unport
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started