Question: ACTIVITY - BASED COSTING, ACTIVITY - BASED MANAGEMENT, MERCHANDISING. Pet World operates a pet supply superstore in Atlanta with three main product lines: food, toys,

ACTIVITY

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BASED COSTING, ACTIVITY

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BASED MANAGEMENT, MERCHANDISING. Pet World operates a pet supply superstore in Atlanta with three main product lines: food, toys, and accessories. Pet World allocates common selling, general, and administration

(

SG&A

)

costs to each product line using the cost of merchandise of each product line. Department manager salaries, while considered SG&A

,

are direct and are assigned directly to each product line. The company wants to optimize the pricing and cost management of each product line and is wondering whether its accounting system is providing it with the best information for making such decisions. Store manager Jason Wu gathers the following information regarding the three product lines:

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