(Click the icon to view the add-or-drop segments information.) Sanchez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: (Click to view the operating income for the stores.) Read the requirements. Requirement 1. By closing down the Rhode Island store, Sanchez can reduce overall corporate overhead costs by $44,000. Calculate Sanchez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Sanchez's operating income if it closes the Rhode Island store. (Complete all answer boxes. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) (Loss in Revenues) Savings in Costs 1080000 Requirements Revenues Operating costs Cost of goods sold 750000 87000 48000 Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead 1. By closing down the Rhode Island store, Sanchez can reduce overall corporate overhead costs by $44,000. Calculate Sanchez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Sanchez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $22,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. 00 45000 49000 1031000 Total operating costs Print Done Effect on operating income (loss) 49000 Enter any number in the edit fields and then click Check Answer. 1 Data Table Connecticut Rhode Island Store Store $ 1,070,000 $ 860,000 750,000 660,000 75,000 90,000 Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs Operating income (loss) 42,000 25,000 43,000 50,000 42,000 22,000 46,000 40,000 1,000,000 885,000 $ 70,000 $ (25,000) Print Done More Info The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Sanchez Corporation, makes the following comment, "Sanchez can increase its profitability by closing down the Rhode Island store or by adding another store like it." Print Done