Studemeir Paint & Floors (SPF) is a retail store specializing in home improvement. The store has experienced net operating losses in its Other Flooring Products line during the last few periods. SPF’s management team thinks that the store will improve its profitability if it stops carrying the Other Flooring Products line. The operating results from the most recent period are: Paint and Paint Supplies Carpet Other Flooring Products Sales $ 193,700 $ 218,000 $ 197,000 Cost of goods sold 127,000 149,000 158,000 SPF estimates that store operating expenses are approximately 25% of revenues. Harish Rana, SPF’s controller, states that while every sale has one purchase order, not every sales dollar requires or uses the same amount of store support activities. He conducts a preliminary investigation and his results and analysis are as follows: Activity (cost driver) Paint and Paint Supplies Carpet Other Flooring Products Order processing (number of purchase orders) 385 133 120 Receiving (number of deliveries) 37 175 59 Customer support (hours required per sale) 0.30 6.0 0.57 Harish estimates activity-cost rates for each activity as follows: Order processing $ 123 per purchase order Receiving 185 per delivery Customer support 24 per hour Required: 1. Prepare a product-line profitability report for SPF under the current costing system. 2. Prepare a product-line profitability report for SPF using the ABC information the controller provides. … 2/2 Required 1 Required 2 Complete this question by entering your answers in the tabs below. Prepare a product-line profitability report for SPF 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. 0.2134 should be entered as 21.34%). Round all other answers to nearest whole dollar.) Required 1 Required 2 Paint & Paint Supplies Carpet Other Flooring Products Store support: Total store support Operating income (loss) Operating margin (loss) % % %
Studemeir Paint & Floors (SPF) is a retail store specializing in home improvement. The store has experienced net operating losses in its Other Flooring Products line during the last few periods. SPF’s management team thinks that the store will improve its profitability if it stops carrying the Other Flooring Products line. The operating results from the most recent period are: Paint and Paint Supplies Carpet Other Flooring Products Sales $ 193,700 $ 218,000 $ 197,000 Cost of goods sold 127,000 149,000 158,000 SPF estimates that store operating expenses are approximately 25% of revenues. Harish Rana, SPF’s controller, states that while every sale has one purchase order, not every sales dollar requires or uses the same amount of store support activities. He conducts a preliminary investigation and his results and analysis are as follows: Activity (cost driver) Paint and Paint Supplies Carpet Other Flooring Products Order processing (number of purchase orders) 385 133 120 Receiving (number of deliveries) 37 175 59 Customer support (hours required per sale) 0.30 6.0 0.57 Harish estimates activity-cost rates for each activity as follows: Order processing $ 123 per purchase order Receiving 185 per delivery Customer support 24 per hour Required: 1. Prepare a product-line profitability report for SPF under the current costing system. 2. Prepare a product-line profitability report for SPF using the ABC information the controller provides. … 2/2 Required 1 Required 2 Complete this question by entering your answers in the tabs below. Prepare a product-line profitability report for SPF 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. 0.2134 should be entered as 21.34%). Round all other answers to nearest whole dollar.) Required 1 Required 2 Paint & Paint Supplies Carpet Other Flooring Products Store support: Total store support Operating income (loss) Operating margin (loss) % % %
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