Product Line Profitability Analysis Studemeir Paint & Floors (SPF) has experienced net operating losses in its Other Flooring Products line during the last few periods. SPF's management team thinks that the store will improve its profitability if they discontinue the Other Flooring Products line. The operating results from the most recent period are: Sales Paint & Paint Supplies $285,000 Carpet $235,000 Other Flooring Products $175,550 Cost of goods sold 165,000 150,000 135,250 SPF estimates that store support expenses are approximately 28.5 percent of revenues. Harish Rana, SPF's controller, states that not every sales dollar requires or uses the same amount of store support activities. He conducts a preliminary investigation and his results and analysis are as follows: Activity (cost driver) Other Flooring Products Paint & Paint Supplies Carpet Order processing (number of purchase orders) 110 200 25 Receiving (number of deliveries) 40 120 10 Inventory management (number of hours per delivery) 10 40 6 Customer support (hours required per sale) 0.5 8.5 0.25 Harish estimates activity-cost rates for each activity as follows: Order processing $135 per purchase order Receiving 180 per delivery Inventory management 30 per hour Customer support 15 per hour Required- 1. Prepare a product-line profitability report for SPF under the current costing system. 2. Prepare a product-line profitability report for SPF using the ABC information the controller provides. 3. What new insights does the ABC system in requirement 2 provide to SPF managers?