. Evaluating a Segment. The Yablanka family has developed an extensive bakery business in Chicago and now has 90 shops. Annually, several new outlets are opened, and old ones are closed. Fred, the controller, reviews the performance of each location and of all store managers. He is currently evaluating Store 54, operated by a relatively experienced manager. Business statistics for the company and Store 54 data are:

The store's lease is a three-year commitment for \(\$ 30,000\) per year. If Store 54 is closed, a nearby Yablanka store would attract \(\$ 50,000\) of Store 54 's lost gross margin. Store 54's manager has a five-year personal services contract for \(\$ 30,000\) per year and could be transferred to a new store. All other salaries and occupancy costs can be eliminated. Home office expenses are allocated evenly among the 90 stores.
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1. Should Store 54 be closed now? Why or why not?
2. If Store 54 gets a 6 -month reprieve, in which areas should the manager attempt to improve?

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Sales.. Expenses: Cost of baked goodies Store salaries and wages. Store occupancy costs. Home office expenses. Total expenses.. Net income. Average Store Percentages 100% Store 54 $400,000 35% $150,000 20 110,000 30 120,000 10 50,000 95% $430,000 5% $ (30,000)