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ID 0 O l , '7; l . a l eztomheducationcom E] l l5] l Hw 12 0 Saved Help Savel. sxn Submlt You received partial credit in the previous attempt. M View previous attempt Superior Markets, Inc. Income Statement For the Quarter Ended September 30 North South East 1 Total store store store points Sales $3,200,000 $740,000 $1,250,000 $1,100,000 Cost of goods sold 1,760,000 423,000 688,000 649,000 Gross margin 1,440,000 317,000 592,000 531,000 Selling and administrative expenses : Selling expenses 821,000 233,400 316,000 271,600 Administrative expenses 393,000 100,000 153,900 131,100 El Total expenses 1,214,000 341,400 469,900 402,700 eBook Net operating income (loss) 5 226,000 $(24,400) $ 122,100 $ 128,300 I Fri: 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 available for your use: References a. The breakdown of the selling and administrative expenses that are shown above is as follows: North South East Total store store Store Selling expenses: Sales salaries $233,800 $ 67,100 $ 34,200 $ 52,500 Direct advertising 181,000 53,000 74,000 54,000 General advertising* 48,000 11,100 19,200 17,700 Store rent 310,000 87,000 122,000 101,000 Depreciation of store fixtures 17,000 4,800 6,200 6,000 Delivery salaries 21,600 7,200 7,200 7,200 Depreoiation of delivery 9,600 3,200 3,200 3,200 equipment Total selling expenses $321,000 $233,400 $316,000 $271,600 M: 5'3\" ( Prev 6 of 6 Next g ID 0 0 i ezto.mheducation.com t. 6 Hw 12 0 Saved Help Savel. Exit Submit You received partial credit in the previous attempt. M View previous attempt . 6 'Allocated on the basis of sales dollars North South East: 1 Total store store store . Administrative expenses: P'"'5 Store managers' salaries 5 73,000 5 22,000 5 31,000 $ 20,000 General office salaries* 48,000 11,100 19,200 17,700 Insurance on fixtures and inventory 27,000 3,100 10,000 3,900 Utilities 108,540 32,190 40,460 35,390 Employment taxes 56,460 16,110 21,240 19,110 General officcher'k 30,000 18,500 32,000 29,500 El Total administrative expenses $393,000 $108,000 $153,900 $131,100 eBook I _ 'Allocated on the basis of sales dollars' 1! Print b. The lease on the building housing the North Store can be broken with no penalty. c' The xtures 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 ifthe North Store were closed. She would be lling a position that would otherwise be lled by hiring a new employee at a salary of $10,100 per quarter The general manager of the North Store would continue to earn her normal salary of $11,100 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. Thls person's salary Is $4,200 per quarter. The delivery equipment would be dlstributed 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. g. Onethird of the insurance in the North Store is on the store's xtures. h. The \"General ofce salaries" and \"General officeother" relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general ofce could be discharged because of the decrease in overall workload. This person's compensation is $5,550 per quarter. References Required: 1. How much emolovee salaries will the comoanv avoid if it closes the North Store? M: III Gm\" ( Prev 6 of 6 : Next G ezto.mheducation.com Connect Course Hero + HW 12 i Saved Help Save & Exit Submit You received partial credit in the previous attempt. Check my work View previous attempt 6 Store were closed, one person in the general OTTIce could be discharged because of the decrease in overall workload. I nIs person's compensation is $5,550 per quarter. Required: 1. How much employee salaries will the company avoid if it closes the North Store? points 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? 01:56:16 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 eBook present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store? Print Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Required 3 Required 4 Required 5 How much employee salaries will the company avoid if it closes the North Store? Employee salaries 109,950 Required 1 Required 2 > Mc Graw Hill Education

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