Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2014 is as follows: (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 Martinez Corporation, makes the following comment, "Martinez 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, Martinez can reduce overall corporate overhead costs by $49,000. Calculate Martinez'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 Martinez's operating income if it closes the Rhode Island store. (Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) (Loss in Revenues) Savings in Costs 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) Comente m Enter any number in the edit fields and then continue to the next question. is as - Martinez Corporation ru (Click to view the op The equipment has a ze Is Maria Lopez Correct? Read the requirements. Requirement 1. By clos Rhode Island store corre Begin by calculating Mar sign.) Requirements 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by $49,000. Calculate Martinez'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. 2. Calculate Martinez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $20,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $7,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Data Table Revenues Print Done Connecticut Store Rhode Island Store $ 1,050,000 $ 850,000 oration artinez er a "0" Operating costs Cost of goods sold 760,000 680,000 Lease rent (renewable each year) 91,000 79,000 Labor costs (paid on an hourly basis) 48,000 46,000 Depreciation of equipment 25,000 20,000 Utilities (electricity, heating) 42,000 42,000 Allocated corporate overhead 49,000 42,000 Total operating costs 1,015,000 909,000 hode Island store as shown by the anal Operating income (loss) 35,000 $ (59,000) Tune here to ch Print Done