Workshop ABC Question 1 Admer owns several home furnishing stores. In each store, consultations, if needed, are undertaken by specialists, who also visit potential customers in their homes, using specialist software to help customers realize their design objectives. Customers visit the store to make their selections from the wide range of goods offered, after which sales staff collect payment and raise a purchase order Customers then collect their self-assembly goods from the warehouse, using the purchase orders and also arrange consultations Each store operates an absorption costing system and costs other than the cost of goods sold are apportioned on the basis of sales floor area. Results of one of Admer's stores for the last three months are as follows Department Kitchens Bathrooms Dining Rooms Total Sales Cost of goods sold Other costs Profit 210,00 63,000 130,250 112,500 37,500 81406 440,000 176,000 113,968 762,500 276,500 325,624 406 The management accountant of Admer is concerned that the bathrooms department of the store has been showing a loss for some time, and is considering a proposal to close the bathrooms department in order to concentrate on the more profitable kitchens and dining rooms departments. He has found that other costs for this store for the last three months are made up of: Employees 12 Sales staff wages Consultation staff wages Warehouse staff wages Administration staff wages 64,800 24,960 30,240 30,624 General overheads (light, heat, rates, etc.) 175,000 624 He has also collected the following information for the last three months Department Number of items sold Purchase orders Floor area (square metres) 16,000 Number of consultations Kitchens 1,000 1,000 Bathrooms Dining Rooms 4,000 2,500 4,000 250 1,500 900 10,000 200 798 that he can use this information to review the store's performance in the last three months from an activity-based costing (ABC) e management accountant believes