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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
Frozen Foods
Baked Goods
Fresh Produce
cost of goods sold
$
$
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:
tableActivity cost driverFrozen,Baked,FreshOrder processing number of purchase ordersReceiving number of deliveriesShelfstocking number of hours per deliveryCustomer support total units sold eea,
The controller estimates activitycost rates for each activity as follows:
tableOrder processing,$per purchase orderReceivingper deliveryShelfstocking,per hourCustomer support,per item
Required:
Prepare a productline profitability report for SFS under the current costing system.
Prepare a productline profitability report for SFS using the ABC information the controller provides.
Complete this question by entering your answers in the tabs below.
Required
Required
Prepare a productline profitability report for SFS using the ABC information the controller provides. Loss amounts should be indicated by a minus sign, Round operating margin loss to decimal places ie should be entered as
Round all other answers to nearest whole dollar.
tableFrozen Food,Baked Goods,Fresh ProduceStore support:,,,,,,Total store support cost,,,,,,Operating income loss
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