Superior Markets, incorporated, operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: The North Store has consistently shown losses over the past two years, For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is avallable for your use: a. The breakdown of the selling and administrative expenses that are shown above is as follows: b. The lease on the building housing the North Store can be broken with no penalty. c. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed. d. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $12,760 per quarter. The general manager of the North Store would continue to earn her normal salary of $13,920 per quarter. All other managers and employees in the North store would be discharged e. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person's salary is $4,640 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete. f. The company pays employment taxes equal to 15% of their employees' salaries. 9. One-third of the insurance in the North Store is on the store's fixtures. h. The "General office salaries" and "General office-other" relate to the overall management of Superior Markets, Incorporated. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person's compensation is $6,960 per quarter. Aequlred: 1 How much employee salaries will the company avoid if it closes the North Store? 2. How much employment taxes will the company avoid if it closes the North Store? 3. What is the financial advantage (disadvantage) of closing the North Store? 4. Assuming that the North Store's foor spoce can't be subleased, would you recommend closing the North Store? 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 custemer loyalty to Superior Markets. Second, ossume that the East Store has enough capocity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yleld 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? Complete this question by entering your answers in the tabs below. How much employee salaries will the company avoid if it closes the North Store? Required: 1. How much employee salaries will the company avold if it closes the North Store? 2. How much employment taxes will the company avold if it closes the North Store? 3. What is the financial advantage (disadvantage) of closing the North Store? 4. Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? 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 soles 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 increosed 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? Complete this question by entering your answers in the tabs below. How much employment taxes will the company avoid if it closes the North Store? North Store were closed, one person in the general office could be discharged because of the decrease in overall workbood. This person's compensation is $6,960 per quarter. Required: 1. How much employee salaries will the company avoid if it cioses the North Store? 2. How much employment taxes will the company avoid if it closes the North Store? 3. What is the financial advantage (disadvantage) of closing the North Store? 4. Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? 5. Assume that the North Store's floor space can't be subleased. However, let's introduce three more assumptions. First assume that it the North Store were closed, one fourth of its sales would transter to the East Store, due to strong customer loyolty to Superior Markets Second, assume that the East Store has enouph capocity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yieid 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? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of closing the North Store? (Enter any "disadvantages" as a negative vaiue.) person's compensation is $6,960 per quarter. Required: 1. How much employee salaties wili the company ovoid if it closes the North Store? 2. How much employment toxes will the compony ovoid if it closes the North Store? 3. What is the financiat odvantage (disadvantage) of closing the North Store? 4. Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? 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 advantoge (disadvantage) of closing the North Store? Complete this question by entering your answers in the tabs below. Assume that the North Store's floor space can' be subleased. Howeveg, let's introduce three more assumptions. First, assume Assume if the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyaty to Superior Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from dosing the North Store. Third, assume that the incressed 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 dosing the North Store? (Enter any "disadvantapes" as zn negative value.)
