Supermarkets (Upper FS) operates at capacity and decides to apply ABC analysis to three product lines: baked goods, milk and fruit juice, and frozen foods. It identifies four activities and their activity cost rates as follows:

Ordering	$ 98 per purchase order
Delivery and receipt of merchandise	$ 81 per delivery
Shelf-stocking	$ 22 per hour
Customer support and assistance	$ 0.18 per item sold

Milk and	Frozen
	Baked Goods	Fruit Juice	Products
Financial data
Revenues	$61,500	$67,000	$52,500
Cost of goods sold	$37,000	$45,000	$36,000
Store support	$11,100	$13,500	$10,800

Activity-area usage
(cost-allocation base)
Ordering (purchase orders)	35	30	20
Delivery (deliveries)	85	45	30
Shelf-stocking (hours)	175	155	25
Customer support (items sold)	12,000	16,000	7,000

Under its simple costing system, Upper FFS allocated support costs to products at the rate of30% of cost of goods sold.

Requirements

1.	Use the simple costing system to prepare a product-line profitability report for Upper FFS.
2.	Use the ABC system to prepare a product-line profitability report for Upper FFS.
3.	What new insights does the ABC system in requirement 2 provide to Upper FFS managers?