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abc, retail product-line profitability

CoursHeroTranscribedText: 5-28 ABC, retail product-line profitability. Fitzgerald Supermarkets (FS) 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: Ordering $95 per purchase order Delivery and receipt of merchandise $76 per delivery Shelf-stocking $19 per hour Customer support and assistance $ 0.15 per item sold 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: Baked Goods Milk and Fruit Juice Frozen Products Financial data Revenues $60,000 $66,500 $50,500 Cost of goods sold $41,000 $51,000 $32,000 Store support $12,300 $15,300 $ 9,600 Activity-area usage (cost-allocation base) Ordering (purchase orders) 44 24 14 Delivery (deliveries) 120 60 36 Shelf-stocking (hours) 170 150 20 Customer support (items sold) 15,400 20,200 7,960 Under its simple costing system, FS allocated support costs to products at the rate of 30% of cost of goods sold. Required 1. Use the simple costing system to prepare a product-line profitability report for FS. 2. Use the ABC system to prepare a product-line profitability report for FS. 3. What new insights does the ABC system in requirement 2 provide to FS managers

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