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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 belleves that the store
Supermart Food Stores (SFS) has experienced net operating losses In its frozen food products line In the last few periods. Management belleves that the store can improve Its profitability if SFS discontinues frozen foods. The operating results from the most recent perlod are: Fresh Frozen Foods Baked Goods Produce $264,88 $436,0 $469,808 362,8e8 Sales Cost of goods sold 247,8e0 352,8e0 SFS estimates that store support expenses, in total, are approximately 13% of revenues. The controller says that not every sales dollar requires or uses the same amount of store support activities. A prellminary analysis reveals store support activities for these three product lines are Fresh Produce Baked Goods Activity (cost driver) Frozen Foods Order processing (number of purchase orders) Receiving (number of deliveries) Shelf-stocking (number of hours per delivery) Customer support (total units sold) 18 68 78 0.2 38,888 97 278 34,980 76,808 The controller estimates activity-cost rates for each activity as follows: Order processing Receiving Shelf-stocking Customer support $ 98 per purchase order 121 per delivery 29.88 per hour 8.17 per item Required 1. Prepare a product-line profitability report for SFS under the current costing system. 2. Prepare a product-line profitablity report for SFS using the ABC Information the controller provides
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