1. Walmart and Target Corporation allocate their retail operating costs using activity-based costing. The following table summarizes the costs and cost drivers:

Department	Walmart Total Cost ($)	Cost Driver	Cost Driver Quantity	Target Total Cost ($)
Electronics	$5,000,000	Sales revenue	$50,000,000	$4,500,000
Apparel	$3,000,000	Floor area (sq. ft.)	500,000 sq. ft.	$2,800,000
Home Goods	$2,000,000	Number of SKUs	10,000 SKUs	$1,800,000
Total	$10,000,000			$9,100,000

• Walmart generated $60,000,000 in electronics sales revenue, has 700,000 sq. ft. of apparel floor area, and offers 15,000 home goods SKUs.
• Allocate retail operating costs per dollar of sales revenue, per sq. ft. of floor area, and per SKU for Walmart and Target using activity-based costing.
• Discuss how differences in operating costs per dollar of sales impact profitability and competitive pricing strategies for Walmart and Target.