Super Bookstore is a large city bookstore that sells books and music CDs and has a caf. Super Bookstore operates at capacity and allocates selling, general, and administration (S, G, and A) costs to each product line using the cost of merchandise of each product line. Super Bookstore wants to optimize the pricing and cost management of each product line. The bookstore is wondering whether its accounting system is providing it with the best information for making such decisions.

Super Bookstore Product Line Information for the Year Ended December 31, 2012

	BOOKS	CDs	Cafe
Revenues	$3,720,480	$2,315,360	$736,216
Cost of Merchandise	$2,656,272	$1,722,311	$556,685
Cost of cafe cleaning	--	--	$18,250
Number of purchase orders	2800	2500	2000
Number of deliveries recieved	1400	1700	1600
Hours of shelf stocking time	1500	1400	1000
Items sold	12016	115768	368108

Super Bookstore incurs the following S, G, and A costs.

Purchasing Department expenses	$474,500
Receiving department expenses	$432,400
Shelf stocking labor expense	$487,500
Customer support expence (cashiers and floor employess)	$91,184
TOTAL	$1,485,584

Based on the data, solve the following problems: a. Suppose Super Bookstore uses the cost of merchandise to allocate all S, G, and A costs. Prepare product line and total company income statements. b. Explain an improved method for allocating costs to the three product lines. Use the method for allocating S, G, and A costs that you propose to prepare new product line and total company income statements. Compare your results with the results in Problem a. c. Write a memo to Super Bookstores management describing how the improved system might be useful for managing Super Bookstore. Submission Requirements: Use MS Excel workbook to show the supporting analysis. For memo, use the textbox in the MS Excel workbook. Show the detailed steps that you performed to solve the problem.