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I need help ASAP plz Problem 12-26 Close or Retain a Store [L012-2 Superior Markets, Inc, operates three stores in a large metropolitan area. A
I need help ASAP plz Problem 12-26 Close or Retain a Store [L012-2 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 Ouarter Ended September 30 :44 North Store South store East Store Total Sales Cost of goods sold Gross margin Selling and adninistrative expenses s 4,500,000 $900,000 $1,800,000 $1,800,000 2.475,000 50,000935,000 990,000 810,000 2,025,000350,000 865,000 Selling expenses Administrative expenses 847,000246,400 322,500 278,100 458,000 121,000 173,400163,600 es Total expenses Net operating income (losB) 1,305,000 367,400 495,900441,1 720,000 (17,400) $ 369,100 $ 368,300 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 nformation is available for your use: a. The breakdown of the selling and administrative expenses that are shown above is as follows: North Store South Store East Store Total Selling expenses Sales salaries Direct advertising General advertising Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery $237,000 63,800 71,000 $102,200 180,000 66,000 87,00027,000 67,500 13,500 27,000 27,000 00,000 84,000 117,00099,000 23,500 6,100 7,500 9,900 8,500 8,50 ts 02:27:18 25,500 8,500 equipment 13,5004,500 4,500 ,500 kipped Total selling expenses $847,000 $246,400 $322,500 $278,100 Allocated on the basis of sales dollars. eBook Print ferences North Store South Store East Store Total Administrative expenses Store managers' salaries General office salaries* Insurance on fixturen and $ 92,500 28,500 37,500 26,500 67,500 14,00027,000 26,500 40,00012,00016,500 11,500 82,12526,78025,800 29,545 63,37517,22021,600 24,555 45,000 458,000 $121,000 $173,400 $163,600 inventory Utilities Employment taxes General office-other* 112,500 22,500 45,000 Total administrative expenses Allocatea on tne pasis or saies aoiars. Check my work b. The lease on the building housing the North Store can be broken with no penalty d. The general manager of the North Store would be retained and transferred to another position in the company if the North Store fixtures being u North Store would be transferred t other two stores if the North Store were closed were closed. She would be filling a position that would otherwise be filled by hiring a new e quarter. The general manager of the North managers and employees in the North store would be discharged. mployee at a salary of $13,000 per Store would continue to earn her normal salary of $14,000 per quarter. All other pany has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were losed. This person's salary is $5,500 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 g. 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, Inc. 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 $7,000 per quarter Required: 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 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 Superic 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 s present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store
I need help ASAP plz
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