Family Supermarkets has decided to increase the size of its Lansing store. It wants information about the profitability of its individual product lines: meats, fresh produce, and packaged food. The following data is for the year 2012 for each product line:
|
Meats |
Fresh Produce |
Packaged Foods |
| Revenue |
$795,000 |
$820,000 |
$475,000 |
| Cost of goods sold |
$595,000 |
$580,000 |
$355,000 |
| purchase orders |
270 |
323 |
160 |
| hours of stocking shelves |
197 |
2,107 |
1,017 |
| items sold |
304,000 |
444,000 |
103,000 |
The Company also provides the following information for 2012 for its three support activities:
| Support Activity |
Budgeted Cost |
Cost Driver |
| Ordering |
$122,000 |
purchase orders |
| Shelf stocking |
$79,000 |
hours of stocking shelves |
| Customer support |
$181,000 |
items sold |
Part A
Family Supermarkets currently uses a single-driver system to allocate period costs to its product lines. The single driver that is used is the Cost of Goods Sold for each product line. Using this system, compute the allocation to Fresh Produce.
Part B
If Family Supermarkets instead used an activity-based costing system to allocate period costs, with the cost pools and cost drivers listed in the tables above, how much would be allocated to Packaged Foods?