ABC, retail product-line profitability. Henderson Supermarkets (HS) operates at capa...

ABC, retail product-line profitability. Henderson Supermarkets (HS) operates at capacity and decides to apply ABC analysis to three product lines: baked goods, milk and fruit juice, and frozen foods. It identifies four activities and their activity cost rates as follows:

The revenues, cost of goods sold, store support costs, activities that account for the store support costs, and activity-area usage of the three product lines are as follows:

Under its simple costing system, HS allocated support costs to products at the rate of 30% of cost of goods sold. 1. Use the simple costing system to prepare a product-line profitability report for HS. 2. Use the ABC system to prepare a product-line profitability report for HS. 3. What new insights does the ABC system in requirement 2 provide to HS managers?