Supermart Food Stores (SFS) has experienced net operating losses in its frozen food products line in...

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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 the store can improve its profitability if SFS discontinues frozen foods. The operating results from the most recent period are: Frozen Foods Sales Cost of goods sold $ 125,000 108,000 Baked Goods $ 94,000 69,000 Fresh Produce $ 166,000 115,000 SFS estimates that store support expenses, in total, are approximately 18% 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) Order processing (number of purchase orders) Receiving (number of deliveries) Shelf-stocking (number of hours per delivery) Frozen Baked Fresh Foods Goods Produce 13 41 99 10 53 120 4 0.3 8 37,000 33,000 66,000 Customer support (total units sold) The controller estimates activity-cost rates for each activity as follows: Order processing $ 80 per purchase order Receiving 110 per delivery Shelf-stocking 16.00 per hour Customer support 0.11 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. 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: Frozen Foods Sales Cost of goods sold $ 125,000 108,000 Baked Goods $ 94,000 69,000 Fresh Produce $ 166,000 115,000 SFS estimates that store support expenses, in total, are approximately 18% 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) Order processing (number of purchase orders) Receiving (number of deliveries) Shelf-stocking (number of hours per delivery) Frozen Baked Fresh Foods Goods Produce 13 41 99 10 53 120 4 0.3 8 37,000 33,000 66,000 Customer support (total units sold) The controller estimates activity-cost rates for each activity as follows: Order processing $ 80 per purchase order Receiving 110 per delivery Shelf-stocking 16.00 per hour Customer support 0.11 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.