Supermart Food Stores (SFS) has experienced net operating losses in its frozen food products line in...

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Supermart Food Stores (SFS) has experienced net operating losses in its frozen food products line in...

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	$	135,000	$	120,000	$	194,000
Cost of goods sold		117,000		88,000		136,000

SFS estimates that store support expenses, in total, are approximately 23% 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)		12		49		100
Receiving (number of deliveries)		12		52		131
Shelf-stocking (number of hours per delivery)		3		0.1		6
Customer support (total units sold)		22,000		35,000		70,000

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


Order processing	$	81	per purchase order
Receiving		108	per delivery
Shelf-stocking		12.00	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.

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)		%		%		%

Frozen FoodBaked GoodsFresh ProduceStore support:Total store support costOperating income (loss)Operating margin (loss)%%%

business accounting

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Answer 1

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Answer a Sales Cost of goods sold Gross profits Store support (23% of Sales) Oprating income (loss) Frozen Food Baked Goods F

А B С D E F 1 1 2 Answer a 3 3 4. 5 6 Sales Cost of goods sold Gross profits Store support (23% of Sales) Oprating income (lo

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