East Meets West Ltd. operates two stores, one in Victoria and another in Halifax. The following income statements were prepared for the most recent year:

Victoria Halifax

Net sales $3,780,000 $960,000

Variable costs:

Cost of goods sold 1,512,000 528,000

Sales commission 189,000 48,000

Utilities 17,200 15,300

Contribution margin $2,061,8 $368,700

Fixed costs:

Annual building lease84,000 39,000

Salaries 380,000 180,000

Allocated corporate overhead 750,000 250,000

Amortization of store equipment & leasehold improvements

60,000 30,000

Operating income (loss) $787,800 $(130,300)

The store equipment and leasehold improvements have no market value. The building leases can be cancelled without penalty.

Required:

1. Calculate the dollar value of sales required for each store to break-even assuming that all of the fixed costs are to be covered?
2. Should management close the Halifax store? Assume that corporate overhead would be reduced by $100,000 if the Halifax store is closed.