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 9 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) 47 59 10 104 132 10 0.1 32,000 26,000 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. 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%).) Sales Cost of goods sold Gross margin Store support Operating income (loss) Operating margin (loss) Frozen Food Baked Goods $ 135,000 $ 120,000 119,000 88,000 $ 16,000 | $ 32,000 22,950 20,400 $ (22,934) $ 11,600 (16.99) % 9.67 % Fresh Produce $ 184,000 128,000 $ 56,000 21,280 $ 34,720 18.87 % Round all other answers to nearest whole dollar.) Sales Frozen Food $ 135,000 119,000 $ 16,000 Baked Goods $ 120,000 88,000 $ 32,000 Fresh Produce $ 184,000 128,000 56,000 Cost of goods sold Gross margin Store support: Order processing Receiving 756 1,050 720 7,020 3,948 6,195 71 8,640 8,736 13,860 12,672 17,280 Shelf-stocking Customer support 9,546 Total store support cost Operating income (loss) Operating margin (loss) 18,854 13,146 52,548 3,452 6,454 $ 1%