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Binny's has noticed below. (All of these facts and numbers are made up.) that its Niles store is losing money. Last year's annual results are

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Binny's has noticed below. (All of these facts and numbers are made up.) that its Niles store is losing money. Last year's annual results are reported Binny's- Niles $3,750,000 Sales Cost of Goods Sold Gross Margin Store Manager Salary Other Management Salaries Staff Salaries Store Rent Advertising Depreciation of Fixtures Corporate Overhead Depreciation of Special Equipment Utilities Employee Benefits Insurance Operating Income (Loss) (2,800,000) 950,000 (110,000) (180,000) (350,000) (150,000) (120,000) (60,000) (85,000) (30,000) (60,000) (140,800) (4500) ($340,300) 30% of the "Other Management Salaries" are allocated from corporate. The remainder can be avoided. "Staff Salaries" can also be avoided. The store manager will be transferred to a different store that has an opening and will continue to receive $110,000. If not for this transfer, Binny's could have filled this position for $100,000 rather than $110,000. Employee benefits are calculated as 22% of salaries. 75% of the advertising costs are spent at the corporate level and are unavoidable. "Corporate Overhead" represents national headquarter expenses that are allocated evenly to each store. . . . The fixtures have no other use. Depreciation cannot be avoided. . The store lease can be broken with a 6-month penalty. . One-third of the insurance is attached to the fixtures and cannot be avoided. . The special equipment can be sold and depreciation can be avoided. Instructions Determine whether this store should be closed. Use the format that we reviewed in class 1. You just made a decision for Year 1. What would be your decision for Year 2? You don't need to show a new table. Just explain your response in a sentence or two. 2. Page 1

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