Reference no: EM132463302

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                                     Food Baked Goods Fresh    Produce

Sales                               $ 141,000       $ 135,000         $ 206,000

Cost of goods sold             125,000            99,000            143,000

SFS estimates that store support expenses, in total, are approximately 17% 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

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

Order processing                 $ 84 per purchase order

Receiving                                107 per delivery

Shelf-stocking                      11.00 per hour

Customer support                   0.29 per item

Required:

Question 1. Create 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%).)