Units Of Par. Lee Optical Shop H... Inbox (3) - gairesari. CK Ltd Is A Retail A retail store purchases and sells three type of products: product A, B, and C. The store currently uses a traditional (simple) costing system to allocate the store support costs on the basis of cost of goods sold to each product. The store plans to adopt Activity-Based Costing (ABC) system and has identified the following key activities: Activity Total Budgeted quantity of cost-allocation base Cost budgeted indirect driver costs for the year of 2019 1. Ordering $6,120 60 orders the number of orders 2. Delivery $12,090 155 deliveries the number of deliveries 3. Shelf- stocking $8,610 410 hours the number of hours spent on shelf-stocking 4. After sales the number of sold out items $858 39,000 items SUCH-SWg 4. After sales service $858 39,000 items the number of sold out items The actual financial data and activity-related data of the store are as follows: Year 2019 Product A Product B Product C Total Financial data: Sales revenues $59,000 $66,000 $51,000 $176,000 Cost of goods sold $36,000 $48,000 $34,000 $118,000 Total store support costs $35,400 Activity consumed by each product: 20 25 15 Ordering (the number of orders) 90 35 30 Delivery (the number of deliveries) 190 180 40 Shelf-stocking (the number of Fari File Edit View History Bookmarks Window Help 100% 27 Tue 10:12 AM buelearning.hkbu.edu.hk @HKBU https://buelearning... Rich LTI Get Homework Hel... 23,000 Units Of Par... 19,000 Units Of Par... 23,000 Units Of Par... Lee Optical Shop H... Inbox (3) - gairesari. CKL After sales service (the number of items sold) 13,500 17,500 8,000 Required: Discuss, with detailed supporting calculations, whether ABC system is favourable for the store's decision making. (Hints: You can compare the cost allocation and profitability of each product under the simple costing system versus ABC system). (20 marks) Question 4 (15 marks) Units Of Par. Lee Optical Shop H... Inbox (3) - gairesari. CK Ltd Is A Retail A retail store purchases and sells three type of products: product A, B, and C. The store currently uses a traditional (simple) costing system to allocate the store support costs on the basis of cost of goods sold to each product. The store plans to adopt Activity-Based Costing (ABC) system and has identified the following key activities: Activity Total Budgeted quantity of cost-allocation base Cost budgeted indirect driver costs for the year of 2019 1. Ordering $6,120 60 orders the number of orders 2. Delivery $12,090 155 deliveries the number of deliveries 3. Shelf- stocking $8,610 410 hours the number of hours spent on shelf-stocking 4. After sales the number of sold out items $858 39,000 items SUCH-SWg 4. After sales service $858 39,000 items the number of sold out items The actual financial data and activity-related data of the store are as follows: Year 2019 Product A Product B Product C Total Financial data: Sales revenues $59,000 $66,000 $51,000 $176,000 Cost of goods sold $36,000 $48,000 $34,000 $118,000 Total store support costs $35,400 Activity consumed by each product: 20 25 15 Ordering (the number of orders) 90 35 30 Delivery (the number of deliveries) 190 180 40 Shelf-stocking (the number of Fari File Edit View History Bookmarks Window Help 100% 27 Tue 10:12 AM buelearning.hkbu.edu.hk @HKBU https://buelearning... Rich LTI Get Homework Hel... 23,000 Units Of Par... 19,000 Units Of Par... 23,000 Units Of Par... Lee Optical Shop H... Inbox (3) - gairesari. CKL After sales service (the number of items sold) 13,500 17,500 8,000 Required: Discuss, with detailed supporting calculations, whether ABC system is favourable for the store's decision making. (Hints: You can compare the cost allocation and profitability of each product under the simple costing system versus ABC system). (20 marks) Question 4 (15 marks)