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	$	431,400		$	261,000		$	196,000
Cost of goods sold		132,000			155,000			161,000

SPF estimates that store support expenses are approximately 25% 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)		490			210			120
Receiving (number of deliveries)		37			190			57
Customer support (hours required per sale)		0.40			6.0			0.80

Harish estimates activity-cost rates for each activity as follows:

Order processing	$	150	per purchase order
Receiving		185	per delivery
Customer support		30	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.

• 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
Operating income (loss)
Operating margin (loss)		%		%		%

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