Check my work Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below 10 points Superior Markets, Inc. Income Statement For the Quarter Ended September 30 North Store South Store East Store Total Sales cost of goods2,255,000 515,000 sold Gross margin Selling and administrative expenses: $4,100,000 $860,000 $1,640,000 $1,600,000 880,000 720,000 eBook 860,000 ,845,000 345,000 780,000 Print Selling expenses Administrative expenses References 276,100 153,600 429,700 Net operating s 568,000 $(14,400)$ 292,100 290,300 839,000 242,400 438,000 117,000 Total expenses1,277,000359,400 320,500 167,400 487,90 income (loss) The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use: a The breakdown of the selling and administrative expenses that are shown above is as follows: North Store South Store East Store Total Selling expenses: Sales salaries $263,400 $ 69,600 80,600 $113,200 Direct advertising General advertising* Store rent Depreciation of 176,000 62,000 83,000 31,000 61,500 12,900 24,600 24,000 280,000 80,000 113,000 87,000 8,700 21,500 store fixtures Delivery salaries 24,300 Depreciation of 5,700 8,100 7,100 8,100 8,100 delivery equipment Total selling 12,300 4,100 4,100 4,100 $839,000 $242,400 $320,500 $276,100 expenses Allocated on the basis of sales dollars. Check my work 7 North Store South Store East Store Total Administrative expenses 10 points Store managers salaries General office salaries Insurance on $ 86,500 S 26,500 35,500 $ 24,500 61,500 13, 000 24,600 23,900 fixtures and inventory eBook 36,000 10,800 14,500 10,700 Utilities 86,145 27,620 29,480 29,045 Employment taxes 65,355 17,580 22,320 25,455 102,500 21,500 41,000 40,000 Print General office- other* Total References administrative $438,000 $117,000 $167,400 $153,600 expenses Allocated on the basis of sales dollars. b. The lease on the building housing the North Store can be broken with no penalty. c. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed. d. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $12,000 per quarter. The general manager of the North Store would continue to earn her normal salary of $13,000 per quarter. All other managers and employees in the North store would be discharged. e. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person's salary is $5,100 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete. f. The company pays employment taxes equal to 15% of their employees' salaries. g. One-third of the insurance in the North Store is on the store's fixtures. h The "General office salaries" and "General office-other" relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person's compensation is $6,500 per quarter. Required: 1. How much employee salaries will the company avoid if it closes the North Store? 2. How much employment taxes will the company avoid if it closes the North Store? 3. What is the financial advantage (disadvantage) of closing the North Store? 4. Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? 5. Assume that the North Store's floor space can't be subleased. However, let's introduce three more assumptions. First, assume that if the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store