Calculate the amount of difference in operating profit

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Reference no: EM133123573

Question - Family Supermarkets (FS) has decided to increase the size of its Adelaide store.  It wants information about the profitability of individual product lines: soft drinks, fresh produce and packaged food. FS provides the following data for 2020 for each product line:


Soft drinks

Fresh produce

Packaged food

Revenues

$317,400

$840,240

$483,960

Cost of goods sold

$240,000

$600,000

$360,000

Cost of bottles returned

$4,800

$0

$0

Number of purchase orders placed

295

236

235

Number of deliveries received

315

176

162

Hours of shelf-stocking time

907

386

1010

Items sold

76417

55528

107186

FS also provides the following information for 2020:

Activity

Description of activity

Total support costs

Cost-allocation base

Bottle returns

Returning of empty bottles to store

$4,800

Direct tracing to soft drink line

Ordering

Placing of orders for purchases

$62,400

766 purchase orders

Delivery

Physical delivery and receipt of merchandise

$100,800

653 deliveries

Shelf-stocking

Stocking of merchandise on store shelves and ongoing restocking

$69,120

2303 hours of shelf-stocking time

Customer support

Assistance provided to customers, including checkout and bagging

$122,880

239131 items sold

Total


$360,000


FS currently allocates store support costs (all costs other than cost of goods sold) to product lines on the basis of cost of goods sold of each product line. If FS allocates store support costs (all costs other than cost of goods sold) to product lines using an ABC system, calculate the amount of difference in operating profit as a percentage of revenues for Fresh produce?

Reference no: EM133123573

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