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Management is very concerned about the Downtown Store's inability to show a profit, and consideration is being given to closing the store. The company has asked you to make a recommendation as to what course of action should be taken. The following additional information is available about the store: The manager of the store has been with the company for many years: he would be retained and transferred to another position in the company if the store were closed. His salary is S7.000 per month, or $21,000 per quarter. If the store were not closed, a new employee would be hired to fill the other position at a salary of 56.000 per month. The lease on the building housing the Downtown Store can be broken with no penalty The fixtures being used in the Downtown Store would be transferred to the other two stores if the Downtown Store were closed. The company's employment taxes are 13% of salaries A single delivery crew serves all three stores. One delivery person could be discharged if the Downtown Store were closed: this person's salary amounts to S9.500 per quarter. The delivery equipment would be distributed to the other stores The equipment does not wear out through use. but it does eventually become obsolete. One-third of the Downtown Store's insurance relates to its fixtures. The general office salaries and other expenses relate to the general management of Thrifty Markets. Inc. The employee in the general office who is responsible for the Downtown Store would be discharged if the store were closed. This employee's compensation amounts to S6.000 per quarter. Required: 1. Prepare a schedule showing the change in revenues and expenses and the impact on the overall company net operating income that would result if the Downtown Store were closed. (Input all amounts as positive values. Round your intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Based on your computations in above, what recommendation would you make to the management of Thrifty Markets. Inc.? The Downtown Store should not be closed. The Downtown Store should be closed Assume that if the Downtown Store were closed, sales in the Uptown Store would increase by S400.000 per quarter due to loyal customers shifting their buying to the Uptown Store. The Uptown Store has ample capacity to handle the increased sales, and its gross margin is 43% of sales. Calculate the Net advantage of closing the Downtown Store. (Negative amount should be indicated with a minus sign. Round your intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Net advantage of closing the Downtown Store What recommendation would you make to the management of Thrifty Markets. Inc.? The Downtown Store should not be closed. The Downtown Store should be closed Management is very concerned about the Downtown Store's inability to show a profit, and consideration is being given to closing the store. The company has asked you to make a recommendation as to what course of action should be taken. The following additional information is available about the store: The manager of the store has been with the company for many years: he would be retained and transferred to another position in the company if the store were closed. His salary is S7.000 per month, or $21,000 per quarter. If the store were not closed, a new employee would be hired to fill the other position at a salary of 56.000 per month. The lease on the building housing the Downtown Store can be broken with no penalty The fixtures being used in the Downtown Store would be transferred to the other two stores if the Downtown Store were closed. The company's employment taxes are 13% of salaries A single delivery crew serves all three stores. One delivery person could be discharged if the Downtown Store were closed: this person's salary amounts to S9.500 per quarter. The delivery equipment would be distributed to the other stores The equipment does not wear out through use. but it does eventually become obsolete. One-third of the Downtown Store's insurance relates to its fixtures. The general office salaries and other expenses relate to the general management of Thrifty Markets. Inc. The employee in the general office who is responsible for the Downtown Store would be discharged if the store were closed. This employee's compensation amounts to S6.000 per quarter. Required: 1. Prepare a schedule showing the change in revenues and expenses and the impact on the overall company net operating income that would result if the Downtown Store were closed. (Input all amounts as positive values. Round your intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Based on your computations in above, what recommendation would you make to the management of Thrifty Markets. Inc.? The Downtown Store should not be closed. The Downtown Store should be closed Assume that if the Downtown Store were closed, sales in the Uptown Store would increase by S400.000 per quarter due to loyal customers shifting their buying to the Uptown Store. The Uptown Store has ample capacity to handle the increased sales, and its gross margin is 43% of sales. Calculate the Net advantage of closing the Downtown Store. (Negative amount should be indicated with a minus sign. Round your intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Net advantage of closing the Downtown Store What recommendation would you make to the management of Thrifty Markets. Inc.? The Downtown Store should not be closed. The Downtown Store should be closed
