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. SPFs 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 Paint Supplies	Carpet	Other Flooring Products
Sales	$ 322,600	$ 217,900	$ 168,900
Cost of goods sold	167,000	155,000	136,250

SPF estimates that store operating expenses are approximately 24% of revenues.

Harish Rana, SPFs 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:

Activity (cost driver)	Paint and Paint Supplies	Carpet	Other Flooring Products
Order processing (number of purchase orders)	510	160	107
Receiving (number of deliveries)	51	122	65
Customer support (hours required per sale)	0.30	6.0	0.68

Harish estimates activity-cost rates for each activity as follows:

Order processing	$ 135	per purchase order
Receiving	170	per delivery
Customer support	21	per hour

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. SPFs 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 Paint Supplies	Carpet	Other Flooring Products
Sales	$ 322,600	$ 217,900	$ 168,900
Cost of goods sold	167,000	155,000	136,250

SPF estimates that store operating expenses are approximately 24% of revenues.

Harish Rana, SPFs 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:

Activity (cost driver)	Paint and Paint Supplies	Carpet	Other Flooring Products
Order processing (number of purchase orders)	510	160	107
Receiving (number of deliveries)	51	122	65
Customer support (hours required per sale)	0.30	6.0	0.68

Harish estimates activity-cost rates for each activity as follows:

Order processing	$ 135	per purchase order
Receiving	170	per delivery
Customer support	21	per hour

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.

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.

Operating income (loss) Operating margin (loss) $ Paint & Paint Supplies 0 % $ Carpet 0 % Other Flooring Products $ 0 % Store support: Total store support Operating income (loss) Operating margin (loss) Paint & Paint Supplies $ 0 0 % $ Carpet 0 0 % Other Flooring Products $ 0 0 %