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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
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 ifSFS discontinues frozen foods. The operating results from the most recent period are: Frozen Foods Baked Goods Fresh Produce Sales $ 129,666 $ 91,966 $ 158,175 Cost of goods sold 165,669 67,966 116,996 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: Frozen Baked Fresh Activity (cost driver) Foods Goods Produce Order processing (number of purchase orders) 19 45 196 Receiving (number of deliveries) 12 55 126 Shelf-stocking (number of hours per delivery) 2 9.5 4 Customer support (total units sold) 36,669 49,966 86,696 The controller estimates activity-cost rates for each activity as follows: Order processing $ 86 per purchase order Receiving 116 per delivery Shelfstocking 15.25 per hour Customer support 9.21 per item Required: 1. Prepare a productline profitability report for 838 under the current costing system. 2. Prepare a product-line profitability report for SFS using the ABC information the controller provides, Complete this question by entering your answers in the tabs below. Required: 1. Prepare a productline 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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 2 decimal places (Le. .2134 should be entered as 21.34%). Round your other answers to nearest whole dollar.) Total store support cost Operating income (loss) Operating margin (loss)
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