Condensed monthly operating income data for Rikes Inc for May follow:

Urban Store Suburban Store Total

Sales $80,000 $120,000 $200,000

Less: Variable costs 32,000 84,000 116,000

Contribution Margin 48,000 36,000 84,000

Less: traceable fixed expenses 20,000 40,000 60,000

Store segment margin 28,000 (4,000) 24,000

Less: Common fixed expenses 4,000 6,000 10,000

Operating income (loss) 24,000 (10,000) 14,000

Rikes is considering closing its Suburban Store. It has gathered the following information in this regard. One-fourth of Suburbans traceable fixed costs will continue if the store is closed. Rikes 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 Rikes to close the Suburban Store would result in a monthly increase (decrease) in Rikes operating income of:

($800)

$4,000

($6,000)

($10,800)