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 utensils Lifestyle 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) 50 40 30
Delivery (deliveries) 180 70 60
Shelf-stocking (hours) 95 90 20
Customer support (items sold) 13,500 17,500 8,000


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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.
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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