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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 protability if SFS discontinues frozen foods. The operating results from the most recent period are: Frozen Foods Baked Goods Fresh Produce Sales 1; 141,339 $ 135,333 $ 236J633 Cost of goods sold 125,333 99,333 143J333 SFS estimates that store support expenses. in total, are approximately 17% 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) 13 53 9? Receiving (number of deliveries) 13 59 141 Shelfstocking (number of hours per delivery) 6 6.4 9 Customer support (total units sold)I 23,333 3?J333 7&J333 The controller estimates activitycost rates for each activity as follows: Order processing $ 811 per purchase order Receiving 187 per delivery Shelf-stocking 11.83 per hour Customer support 6.29 per item Required: 1. Prepare a productline protability report for SFS under the current costing system. 2. Prepare a productsline protability report for SFS using the ABC information the controller provides. Required 1 Required 2 Prepare a product-line profitability report for SFS under the current costing system. (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%).) ...: Frozen Food Baked Goods Fresh Produce $ 0 0 $ 0 Operating income (loss) Operating margin (loss) % % % 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 Fresh Produce $ 0 $ 0 $ 0 Store support Total store support cost 0 0 0 Operating income (loss) Operating margin (loss) % % %
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