costacctg13_sm_ch05

Ifthis is not possiblevilleagas should

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Unformatted text preview: en ABC is used. Although it const itutes 31.67% of COGS, it uses a higher percentage of total resources in each activit y area, especially the high cost delivery act ivit y area. In contrast, frozen products draws a much lower percentage of total resources used in each act ivit y area than its percentage of total COGS. Hence, under ABC, frozen products is much more profitable. Family Supermarkets may want to explore ways to increase sales o f frozen products. It may also want to explore price increases on baked goods. 5­15 SOLUTION EXHIBIT 5­23 Product­Costing Overviews of Family Supermarkets PANEL A: SIMPLE COSTING SYSTEM INDIRECT CO ST PO O L CO ST ALLO CATIO N BASE } } } } St o r e Support CO G S CO ST O BJECT: PRO DUCT LINE Indirect Costs Direct Costs DIRECT CO ST CO G S PANEL B: ABC SYSTEM INDIRECT COST POOL COST ALLOCATION BASE COST OBJECT: PRODUCT LINE Customer Support Ordering Delivery Shelf­ Stocking Number of Purchase Order Number of Deliveries Hours of Shelf­Stocking Number...
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