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 $ 120,000 $ 91,000 $ 158,175 Cost of goods sold 105,000 67,000 110,000 SFS estimates that store support expenses, in total, are approximately 20% 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) 10 45 100 Receiving (number of deliveries) 12 55 120 Shelf-stocking (number of hours per delivery) 2 0.5 4 Customer support (total units sold) 30,000 40,000 86,000 The controller estimates activity-cost rates for each activity as follows: Order processing $ 80 per purchase order Receiving 110 per delivery Shelf-stocking 15.25 per hour Customer support 0.21 per item Required: 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. .2134 should be entered as 21.34%).) Cost of goods sold Customer support Order processing Receiving Sales Shelf-stocking Store support Frozen Food Baked Goods Fresh Produce Operating income (loss) Operating margin (loss) % % % Prepare a product-line profitability report for SFS using the ABC information the controller provides. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%). Round your other answers to nearest whole dollar.)
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 |
$ 120,000 |
$ 91,000 |
$ 158,175 |
|
Cost of goods sold |
105,000 |
67,000 |
110,000 |
SFS estimates that store support expenses, in total, are approximately 20% 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) |
10 |
45 |
100 |
|
Receiving (number of deliveries) |
12 |
55 |
120 |
|
Shelf-stocking (number of hours per delivery) |
2 |
0.5 |
4 |
|
Customer support (total units sold) |
30,000 |
40,000 |
86,000 |
The controller estimates activity-cost rates for each activity as follows:
|
Order processing |
$ 80 |
per purchase order |
|
Receiving |
110 |
per delivery |
|
Shelf-stocking |
15.25 |
per hour |
|
Customer support |
0.21 |
per item |
Required:
- 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. .2134 should be entered as 21.34%).)
- Cost of goods sold
- Customer support
- Order processing
- Receiving
- Sales
- Shelf-stocking
- Store support
|
|
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Prepare a product-line profitability report for SFS using the ABC information the controller provides. (Loss amounts should be indicated by a minus sign. Round operating margin (loss) to 2 decimal places (i.e. .2134 should be entered as 21.34%). Round your other answers to nearest whole dollar.)
- Cost of goods sold
- Customer support
- Order processing
- Receiving
- Sales
- Shelf-stocking
|
|
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