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	$	241,000		$	390,000		$	419,000
Cost of goods sold		223,000			315,000			323,000

SFS estimates that store support expenses, in total, are approximately 14% 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)		13			65			104
Receiving (number of deliveries)		14			70			257
Shelf-stocking (number of hours per delivery)		3			0.3			7
Customer support (total units sold)		24,000			32,000			64,000

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

Order processing	$	99	per purchase order
Receiving		110	per delivery
Shelf-stocking		18.00	per hour
Customer support		0.25	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 $241,000 223,000 Fresh Produce $ 419,000 323,000 Baked Goods $390,000 315,000 Sales Cost of goods sold SFS estimates that store support expenses, in total, are approximately 14% 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: Baked Goods Fresh Produce Frozen Foods 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) 13 14 65 70 104 257 3 24,000 0.3 32,000 7 64,000 The controller estimates activity-cost rates for each activity as follows: Order processing Receiving Shelf-stocking Customer support $ 99 per purchase order 110 per delivery 18.00 per hour 0.25 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 Operating income (loss) Operating margin (loss) % % %