Question: Uli Boxes is a retailer with 3 product lines, with each product line is supplied by a single supplier. Under its traditional costing method the

 Uli Boxes is a retailer with 3 product lines, with eachproduct line is supplied by a single supplier. Under its traditional costing

Uli Boxes is a retailer with 3 product lines, with each product line is supplied by a single supplier. Under its traditional costing method the store support (i.e.ordering and delivery costs) are allocated based on working-hours spent by warehouse staff and the following is the current analysis of the profit of each product line:

Details

Product Line 1 $

Product Line 2 $

Product Line 3 $

Total $

Revenue

65,000

85,000

50,000

200,000

Cost of sales

40,000

65,000

25,000

130,000

Store Support

12,000

15,000

10,000

37,000

Total costs

52,000

80,000

35,000

167,000

Profit before other overheads allocated

13,000

5,000

15,000

33,000

Profit margin

20%

6%

30%

17%

Uli Boxes wants to improve profitability and it has therefore decided that it should drop product line 2 as it has the lowest profit before other overheads allocated.

You have been asked to complete an analysis based on Activity-Based Costing and you have obtained the following information:

Number of activities

Product Line 1

Product Line 2

Product Line 3

Orders placed

30

15

55

Deliveries made

40

20

40

Cost per activity

Ordering

$ 120.00

Delivery

$ 250.00

What would be the profit margin (before other overheads allocated) under Activity-Based Costing for Product Line 2 (round your answer to the nearest whole number)?

method the store support (i.e.ordering and delivery costs) are allocated based onworking-hours spent by warehouse staff and the following is the current analysisof the profit of each product line:DetailsProduct Line 1 $Product Line 2$Product Line 3 $Total $Revenue65,00085,00050,000200,000Cost of sales40,00065,00025,000130,000Store Support12,00015,00010,00037,000Total costs52,00080,00035,000167,000Profit before other overheads

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