A Northern Stores is a retailer in British Columbia. The most recent monthly income statement for Northern Stores is given below: Total Store I Store II Sales $2,700,000 $1,400,000 $1,300,000 Variable expenses 1,500,000 1,000,000 500,000 Contribution margin 1,200,000 400,000 800,000 Traceable fixed expenses 420,000 280,000 140,000 Common fixed expenses 270,000 103,000 167,000 Operating income $510,000 $17,000 $493,000 Northern is considering closing Store I. If Store I is closed, 20% of its traceable fixed expenses would continue to be incurred. Also, the closing of Store I would result in a 25% 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: 1. Compute the overall increase or decrease in the operating income of Northern Stores if Store I is closed. (4 marks) Overall increase ( decrease) in operating income 2. Should Store 1 be closed? (1 mark) Answer: Reason