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	$	135,000		$	120,000		$	184,000
Cost of goods sold		119,000			88,000			128,000

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:

Activity (cost driver)	Frozen Foods			Baked Goods			Fresh Produce
Order processing (number of purchase orders)		9			47			104
Receiving (number of deliveries)		10			59			132
Shelf-stocking (number of hours per delivery)		6			0.1			8
Customer support (total units sold)		26,000			32,000			64,000

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

Order processing	$	84	per purchase order
Receiving		105	per delivery
Shelf-stocking		12.00	per hour
Customer support		0.27	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 $135,000 119,000 Fresh Baked Goods Produce $120,000 $184,000 88,000 128,000 Sales Cost of goods sold 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 Foods Baked Goods Fresh Produce 47 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) 1059 104 132 6 26,000 0.1 32,000 64,000 The controller estimates activity-cost rates for each activity as follows: Order processing Receiving Shelf-stocking Customer support $ 84 per purchase order 105 per delivery 12.00 per hour 0.27 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