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 $164,000 150,000 Fresh Baked Goods Produce $198,000 160,000 $262,000 200,000 SFS estimates that store support expenses, in total, are approximately 15% 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: Activity (cost driver) Frozen Foods Baked Goods Fresh Produce Order processing (number of purchase orders) 11 54 95 Receiving (number of deliveries) 12 71 172 Shelf-stocking (number of hours per delivery) 6 0.2 7 Customer support (total units sold) 20,000 37,000 74,000 The controller estimates activity-cost rates for each activity as follows: Order processing $ 87 per purchase order Receiving 102 per delivery Shelf-stocking Customer support 16.00 per hour 0.18 per item Required: 1. Prepare a product-line profitability report for SFS under the current costing system. 2. Prepare a product-line profitability report for SFS using the ABC information the controller provides. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a product-line 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 2 decimal places (i.e. 0.2134 should be entered as 21.34%). Round all other answers to nearest whole dollar.) Frozen Food Baked Goods Sales $ 164,000 $ 198,000 ( Fresh Produce $ 262,000 Cost of goods sold 150,000 160,000 200,000 Gross margin $ 14,000 S 38,000 S 62,000 Store support: Order processing Receiving Shelf-stocking 957 4,698 8,265 1,224 7,242 17,544 96 3 112 3,600 6,660 13,320 Customer support Total store support cost 5,877 18,603 39,241 Operating income (loss) $ 8,123 $ 19,397 $ 22,759 Operating margin (loss) 4.95 % 9.80 % 8.69 %