Hi- Can I please have assistance on the following:
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:
Superior Markets, Inc. Income Statement For the Quarter Ended September 30 North South East Total Store Store Store Sales $4,020,000 $964,800 $1,608,000 $1,447,200 Cost of goods sold 2,220,648 540,288 884,400 795,960 Gross margin 1,799,352 424,512 723,600 651,240 Selling and administrative expenses: Selling expenses 1,094,780 310,076 422,100 362,604 Administrative expenses 513,220 142,040 202,206 168,974 Total expenses 1,608,000 452,116 624,306 531,578 Net operating income (loss) $ 191,352 $(27,604) $ 99,294 $ 119,662 [ North South East Total Store Store Store Selling expenses : Sales salaries $ 320,260 $ 93, 800 $119, 260 $107, 200 Direct advertising 250 , 580 68,340 96 , 480 85 , 760 General advertising* 60, 300 14 , 472 24, 120 21, 708 Store rent 402 , 000 113 ,900 160, 800 127, 300 Depreciation of store fixtures 21 , 440 6 , 164 8 , 040 7, 236 Delivery salaries 28 , 140 9, 380 9 , 380 9, 380 Depreciation of delivery equipment 12 , 060 4 , 020 4 , 020 4 , 020 Total selling expenses $ 1 , 094, 780 $310, 076 $422, 100 $362 , 604 *Allocated on the basis of sales dollars.North South East Total Store Store Store Administrative expenses: Store managers' salaries $ 93, 800 $ 28, 140 $ 40, 200 $ 25 , 460 General office salaries* 67, 000 16 , 080 26, 800 24, 120 Insurance on fixtures and 33, 500 10 , 050 12 , 060 inventory 11, 390 Utilities 142 , 040 41 , 540 53 , 600 46 , 900 Employment taxes 76, 380 22, 110 29 , 346 24 , 924 General office other* 100 , 500 24, 120 40 , 200 36, 180 Total administrative expenses $513, 220 $142 , 040 $202, 206 $168, 974 *Allocated on the basis of sales dollars.Required 1 Required 2 Required 3 Required 4 Required 5 How much employee salaries will the company avoid if it closes the North Store? Required 1 Required 2 Required 3 Required 4 Required 5 How much employment taxes will the company avoid if it closes the North Store? Required 1 Required 2 Required 3 Required 4 Required 5 What is the financial advantage (disadvantage) of closing the North Store? (Enter any "disadvantages" as a negative value.) Financial advantage (disadvantage)Required 1 Required 2 Required 3 Required 4 Required 5 Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? The North Store should be closed. The North Store should not be closed.Required 1 Required 2 Required 3 Required 4 Required 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? (Enter any "disadvantages" as a negative value.) Show lessA
