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Supermart Food Stores ( SFS ) has experienced net operating losses in its frozen food products line in the last few periods. Management believes that
Supermart Food Stores SFS has experienced net operating losses in its frozen food products line in the last few periods. Management believes that the store can improve its profitability if SFS discontinues frozen foods. The operating results from the most recent period are: Sales Cost of goods sold Frozen Foods Baked Goods Fresh Produce SFS estimates that store support expenses in total, are approximately of revenues The controller says that not every sales dollar requires or uses the same amount of store support activities A preliminary analysis reveals store support activities for these three product lines are: ences Activity cost driver Order processing number of purchase orders Receiving number of deliveries Shelfstocking number of hours per delivery Customer support total units sold Frozen Baked Foods Goods Fresh Produce The controller estimates activitycost rates for each activity as follows : Order processing Receiving Shelfstocking Customer support per purchase order per delivery per hour per item Required: Prepare a product line profitability report for SFS under the current costing system. Prepare a productline profitability report for SFS using the ABC information the controller provides
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