Studemeir Paint & Floors (SPF) is a retail store specializing in home improvement. The store has experienced net operating losses in Other Flooring Products line during the last few periods, SPF's management team thinks that the store will improve its profitability if stops carrying the Other Flooring Products line. The operating results from the most recent period are: Paint and Paint Supplies Carpet Sales $ 278,600 $ 261,000 154,000 183,000 Cost of goods sold SPF estimates that store operating expenses are approximately 24% 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: Other Flooring Products $191,000 150,000 Paint and Paint Supplies 410 37 0.50 Activity (cost driver) Order processing (number of purchase orders) Receiving (number of deliveries) Customer support (hours required per sale) Harish estimates activity-cost rates for each activity as follows: Order processing $140 per purchase order 190 per delivery Receiving Customer support 20 per hour Carpet 185 155 6.0 Other Flooring Products 116 60 0.70 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.
Studemeir Paint & Floors (SPF) is a retail store specializing in home improvement. The store has experienced net operating losses in Other Flooring Products line during the last few periods, SPF's management team thinks that the store will improve its profitability if stops carrying the Other Flooring Products line. The operating results from the most recent period are: Paint and Paint Supplies Carpet Sales $ 278,600 $ 261,000 154,000 183,000 Cost of goods sold SPF estimates that store operating expenses are approximately 24% 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: Other Flooring Products $191,000 150,000 Paint and Paint Supplies 410 37 0.50 Activity (cost driver) Order processing (number of purchase orders) Receiving (number of deliveries) Customer support (hours required per sale) Harish estimates activity-cost rates for each activity as follows: Order processing $140 per purchase order 190 per delivery Receiving Customer support 20 per hour Carpet 185 155 6.0 Other Flooring Products 116 60 0.70 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.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter13: The Balanced Scorecard: Strategic-based Control
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Problem 13E: Bannister Company, an electronics firm, buys circuit boards and manually inserts various electronic...
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![3
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 .
Carpet
Paint
Supplies
$ 278,600 $ 261,000
154,000
183,000
Sales
Cost of goods sold
SPF estimates that store operating expenses are approximately 24% 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:
Order processing
Receiving
Customer support
Activity (cost driver)
Order processing (number of purchase orders)
Receiving (number of deliveries)
Customer support (hours required per sale)
Harish estimates activity-cost rates for each activity as follows:
$140 per purchase order
190 per delivery
20
per hour
Store support:
Other
Flooring
Products
$191,000
150,000
Paint & Paint
Supplies
Paint and Paint
Supplies
410
37
0.50
$
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.
Complete this question by entering your answers in the tabs below.
0 $
Required 1 Required 2
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)
Carpet
Carpet
185
0
Other Flooring
Products
$
155
6.0
other Flooring
Products
116
60
0.70
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52615ebc-3deb-446b-94e8-8fddbf33eb42%2Fae878708-deda-47d7-a638-a94165854a6a%2F0p725xn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3
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 .
Carpet
Paint
Supplies
$ 278,600 $ 261,000
154,000
183,000
Sales
Cost of goods sold
SPF estimates that store operating expenses are approximately 24% 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:
Order processing
Receiving
Customer support
Activity (cost driver)
Order processing (number of purchase orders)
Receiving (number of deliveries)
Customer support (hours required per sale)
Harish estimates activity-cost rates for each activity as follows:
$140 per purchase order
190 per delivery
20
per hour
Store support:
Other
Flooring
Products
$191,000
150,000
Paint & Paint
Supplies
Paint and Paint
Supplies
410
37
0.50
$
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.
Complete this question by entering your answers in the tabs below.
0 $
Required 1 Required 2
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)
Carpet
Carpet
185
0
Other Flooring
Products
$
155
6.0
other Flooring
Products
116
60
0.70
0
![Print
References
2. Prepare a producene pr
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
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 a 21.34%).
Round all other answers to nearest whole dollar.)
Store support:
Total store support
Operating income (loss)
Operating margin (loss)
Paint & Paint
Supplies
$
0
0
%
$
Carpet
< Required 1
0
0
%
Other Flooring
Products
$
0
0
%
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52615ebc-3deb-446b-94e8-8fddbf33eb42%2Fae878708-deda-47d7-a638-a94165854a6a%2Fanidfwc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Print
References
2. Prepare a producene pr
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
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 a 21.34%).
Round all other answers to nearest whole dollar.)
Store support:
Total store support
Operating income (loss)
Operating margin (loss)
Paint & Paint
Supplies
$
0
0
%
$
Carpet
< Required 1
0
0
%
Other Flooring
Products
$
0
0
%
Required 2 >
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