Martinez Market (MM) runs two convenience stores, one in Vancouver and one in Surrey. Operating income for each store in the year follows: E (Click the icon to view the operating income for the stores.) The equipment has a remaining useful life of one year and a zero disposal price. In a senior management meeting, Maria Lopez, the management accountant at Martinez Market, makes the following comment, "MM can increase its profitability by closing down the Surrey store or by adding more stores like it." Required .... Requirement 1. Calculate MM's operating income if it closes down the Surrey store. By closing down the store, MM can reduce overall corporate overhead costs by $58,000. Is Maria Lopez correct? Explain. (Enter losses in revenues as a negative amount. Leave cells blank if the cost is not relevant. If the net effect is an operating loss, enter the amount with parentheses or a minus sign.) Incremental Revenue and Savings in Costs from Closing Surrey Store Revenues Operating costs: Cost of goods sold Lease rent (renewable each year) Labour costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss) Store operating income Vancouver $ 1,090,000 $ Surrey 860,000 Revenues Operating costs: Cost of goods sold Lease rent (renewable each year) Labour (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs 725,000 86,000 40,000 25,000 48,000 48,000 700,000 79,000 44,000 19,000 42,000 41,000 972,000 925,000 $ 118,000 $ (65,000) Operating income (loss) - Required Answer the following questions referring to the data provided. 1. Calculate MM's operating income if it closes down the Surrey store. By closing down the store, MM can reduce overall corporate overhead costs by $58,000. Is Maria Lopez correct? Explain. 2. Calculate MM's operating income if it opens another store with revenues and costs identical to those of the Surrey store including a cost of $19,000 to acquire equipment with a one-year useful life and zero disposal price). Opening this store will increase corporate overhead costs by $5,000. Is Maria Lopez correct? Explain