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: Sales Cost of goods sold Frozen Foods Baked Goods $ 288,000 $ 493,000 271,000 399,000 Fresh Produce $ 524,000 404,000 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 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) Customer support (total units sold) Frozen Foods 11 8 5 22,000 Baked Goods 73 69 0.1 39,000 Fresh Produce 92 319 6 78,000 The controller estimates activity-cost rates for each activity as follows: Order processing Receiving Shelf-stocking Customer support $ 96 122 26.00 0.27 per purchase order per delivery per hour 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a product-line profitability report for SFS using the ABC information the controller provides. (Loss amounts should be Receiving Shelf-stocking Customer support 122 26.00 0.27 ur. Order per delivery per hour 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. Complete this question by entering your answers in the tabs below. 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) % % % 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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: 0 0 Total store support cost Operating income (loss) Operating margin (loss) % %
