Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain.

Lopez is

correct

not correct

that Rivera Corporation's operating income would increase if it closes down the Rhode Island store as shown by the analysis above.

2014 is as follows: Rivera Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store (Click to view the operating income for the stores.) The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Rivera Corporation, makes the following comment, "Rivera can increase its profitability by closing down the Rhode Island store." Is Maria Lopez Correct? Read the requirements, Requirement 1. By closing down the Rhode Island store, Rivera can reduce overall corporate overhead costs by $38,000. Calculate Rivera's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Rivera's operating income if it closes the Rhode Island store. Data Table operating loss enter the amount with parentheses or a minus sign.) (Loss in Revenues) Savings in Costs Connecticut Store Rhode Island Store $ 1,070,000 $ 800,000 Revenues 725,000 610,000 75,000 90.000 Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs 40,000 44,000 25,000 18.000 Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs Operating income (loss) 40,000 43,000 36,000 46,000 966.000 826,000 $ 104,000 $ (26,000) Effect on operating income (loss)