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 Baked Goods Fresh Produce

Sales $129,000 $102,000 $170,000

Cost of goods sold 111,000 75,000 118,000

SFS estimates that store support expenses, in total, are approximately 20% 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)15 44 105

Receiving (number of deliveries) 8 55 127

Shelf-stocking (number of hours per delivery) 3 0.3 5

Customer support (total units sold) 32,000 35,000 70,000

The controller estimates activity-cost rates for each activity as follows:

Order processing $82per purchase

orderReceiving 109per delivery

Shelf-stocking1 3.00per hour

Customer support 0.26per item

Required:

1. make a product-line profitability report for SFS under the current costing system.

2. make a product-line profitability report for SFS using the ABC information the controller provides.