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(15 points) Northern Stores is a retailer in the upper Midwest. The most recent monthly income statement for Northern Stores is given below: Sales.. ..........
(15 points) Northern Stores is a retailer in the upper Midwest. The most recent monthly income statement for Northern Stores is given below: Sales.. .......... Variable expenses............... Contribution margin................ Traceable fixed expenses ...... Segment margin........... Common fixed expenses........ Net operating income............. Total $2,100,000 1.260.000 840,000 420,000 420.000 350.000 $ 70.000 Store | $1,300,000 882.000 418,000 231,000 187.000 210.000 $ (23,000) Store 11 $800.000 378.000 422.000 189.000 233.000 140.000 $ 93.000 Northern is considering closing Store I. If Store L is closed, one-fourth of its traceable fixed expenses would continue. Also, the closing of Store I would result in a 20% decrease in sales in Store II. Northern allocates common fixed expenses on the basis of sales dollars and none of these costs would be saved if a store were shut down. Required: Compute the overall increase or decrease in the net operating income of Northern Stores if Store l is closed. Show
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