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Condensed monthly operating income data for Rike's Inc. for May follow: Urban Store Suburban Store Total Sales $80.000 $120,000 $200,000 Variable Costs (32,000) (84,000) (116,000)

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Condensed monthly operating income data for Rike's Inc. for May follow: Urban Store Suburban Store Total Sales $80.000 $120,000 $200,000 Variable Costs (32,000) (84,000) (116,000) Traceable (direct) fixed costs (20,000) (40,000) (60,000) Store segment margin 28,000 (4,000) 24,000 Common (indirect) fixed costs (4,000) (6,000) (10,000) Operating income $24,000 $(10,000) $14,000 Rike's is considering closing its Suburban Store. It has gathered the following information in this regard One-fourth of Suburban's traceable fixed costs will continue if the store is closed. Rike's allocates common fixed costs to each store on the basis of 5% of sales dollars. If the Suburban Store were shut down, the Urban Store would be charged with the entire $10,000 of common fixed costs. Management estimates that closing its Suburban Store would result in a 10% decrease in its Urban Store sales. A decision by Rike's to close the Suburban Store would result in a monthly increase (decrease) in Rike's operating income of: $(30,800) $4,000 $(10,800) $10,000 $(14000)

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