Studemeir Paint & Floors (SPF) is a retail store specializing in home improvement. The store 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 stops carrying the Other Flooring Products line. The operating results from the most recent period are:

	Paint and Paint Supplies	Carpet	Other Flooring Products
Sales	$ 295,000	$ 214,900	$ 167,900
Cost of goods sold	165,000	150,000	135,250

SPF estimates that store support expenses are approximately 24% 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)	425	150	100
Receiving (number of deliveries)	50	120	60
Customer support (hours required per sale)	0.50	8.0	0.75

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

Order processing	$ 140	per purchase order
Receiving	180	per delivery
Customer support	18	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.