Harry Super Store Products Analysis Assignment Help With Solution

Harry Super Store Products Analysis Assignment Help With Solution

 
Harry Super-Store (HS) operates at capacity and decides to apply ABC analysis to three product lines: food, home utensils and lifestyle products. It identifies four activities and their activity cost rates as follows:
 

Ordering$51 per purchase order
Delivery and receipt of merchandise$39 per delivery
Shelf-stocking$42 per hour
Customer support and assistance$0.22 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:
 

       Food   Home utensilsLifestyle products
Financial data   
Revenues$59,500$59,500$51,000
Cost of goods sold$36,000$48,000$34,000
Store support$10,800$14,400$10,200
Activity-area usage (cost-allocation base)   
Ordering (purchase orders)504030
Delivery (deliveries)1807060
Shelf-stocking (hours)959020
Customer support (items sold)13,50017,5008,000

 
 

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Under its simple costing system, HS allocated support costs to products at the rate of 30% of cost of goods sold.
 
Required:
 
a.Use the simple costing system to prepare a product-line profitability report for HS.
 
b.Use the ABC system to prepare a product-line profitability report for HS.
 
c.What new insights does the ABC system in requirement (b) provide to HS managers?
 

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