Martinez Market (MM) runs two convenience stores, one in Vancouver and one in Surrey. Operating income for each store in 2018 follows: EE (Click the icon to view the operating income for the stores.) The equipment has a remaining 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 $39,000. 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.) X (Loss in Revenues) Store operating income Savings in Costs Revenues Vancouver Surrey Operating costs: $ 1,110,000 $ 800,000 Cost of goods sold Revenues Lease rent (renewable each year) Operating costs: Labour costs (paid on an hourly basis) Cost of goods sold 760,000 700,000 Depreciation of equipment Lease rent (renewable each year) 71,000 90,000 Utilities (electricity, heating) Labour (paid on an hourly basis) 46,000 47,000 Depreciation of equipment 24,000 Corporate overhead 26,000 38,000 43,000 Utilities (electricity, heating) Total operating costs 47,000 37,000 Allocated corporate overhead Effect on operating income (loss) 1,005,000 924.000 Total operating costs X Required 105.000 $ (124,000) Operating income (loss) 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 $39,000. Is Maria Lopez correct? Explain Print Done 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 $26,000 to acquire equipment with a one-year useful life and zero disposal price). Opening this store will increase corporate overhead costs by $2,000. Is Maria Lopez correct? Explain. ? Check