Family supermarkets currently uses a single-driver system

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Reference no: EM13600977

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 $800,000 $830,000 $500,000
Cost of goods sold $600,000 $590,000 $380,000
purchase orders 265 330 149
hours of stocking shelves 201 2,067 1,098
items sold 307,000 431,000 127,000

The Company also provides the following information for 2012 for its three support activities:

Support Activity Budgeted Cost Cost Driver
Ordering $127,000 purchase orders
Shelf stocking $78,000 hours of stocking shelves
Customer support $184,000 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 the number of items sold of each product line. Using this system, compute the allocation to Meats.?

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?

Reference no: EM13600977

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