ABC, retail product-line profitability. Henderson Supermarkets (HS) 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:

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:

Under its simple costing system, HS 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 HS.
2. Use the ABC system to prepare a product-line profitability report for HS.
3. What new insights does the ABC system in requirement 2 provide to HS managers?

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Ordering Delivery and receipt of merchandise Shelf-stocking Customer support and assistance $ 104 per purchase order $ 80 per delivery $ 22 per hour $0.25 per item sold