oints 04.03.19 Superior Markets, Incorporated, operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Superior Markets, Incorporated Income Statement For the Quarter Ended September 30 Total etlook Sales Cost of goods sold " Pent Gross margin Selling and administrative expenses: References Selling expenses Administrative expenses Total expenses Net operating income (loss) Mc North Store) South Store East Store $ 3,600,000 1,908,640 $ 864,000 483,840 $1,440,000 792,000 $ 1,296,000 712,800 1,611,360 380,160 648,000 960,400 277,600 378,000 459,600 127,200 181,080 583,200 324,720 151, 320 1,440,000 404,880 559,080 $171,360 $ (24,720) $88,920 476,040 $107,160 The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use: a. The breakdown of the selling and administrative expenses that are shown above is as follows: Total Selling expenses: North Store South Store East Store Sales salaries Direct advertising General advertising $286,800 224,400 $34,000 61,200 5 100,000 $ 56,000 86,400 76,500 54,000 12,960 21,600 19,440 Store cent 360,000 102,000 144,000 114,000 Depreciation of store fixtures 19,2001 5,520 7,200 6,400 a. The breakdown of the selling and administrative expenses that are shown above is as follows: Selling expenses: Sales salaries Direct advertising boints 2040252) Store rent eBook PH feferences General advertising Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total selling expenses "Allocated on the basis of sales dollars. Administrative expenses: Store managers salaries General office salaries Insurance on fixtures and inventory Utilities teployment taxes General office-other Total administrative expenses "Allocated on the basis of sales dollars. Total North Store South Store. East Store $ 286,800 224,400 $ 84,000 61,200 $106,800 86,400 $ 96,000 54,000 12,960 21,600 76,800 19,440 360,000 102,000 144,000 114,000 19,200 5,520 7,200 6,480 25,200 8,400 8,400 8,400 10,800 3,600 3,600 3,600 $980,400 $277,680 $ 378,000 $324,720 Total North Store. South Store East Store $ 84,000 60,000 $ 25,200 14,400 $ 36,000 $22,800 24,000 21,600 30,000 9,000 10,500 10,200 127,200 37,200 45,000 42,000 68,400 19,000 26,200 22,320 90,000 21,600 36,000 32,400 $459,600 $127,200 $181,000 $151,320 b. The lease on the building housing the North Store can be broken with no penalty. c. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed. d. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $13,200 per quarter. The general manager of the North Store would continue to earn her normal salary of $14.400 per quarter. All other managers and employees in the North store would be discharged. e. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were nts 04:02:21 etlook Print References b. The lease on the building housing the North Store can be broken with no penalty. c. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed. d. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $13,200 per quarter. The general manager of the North Store would continue to earn her normal salary of $14.400 per quarter. All other managers and employees in the North store would be discharged. e. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This person's salary is $4,800 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete. f. The company pays employment taxes equal to 15% of their employees' salaries. g. One-third of the insurance in the North Store is on the store's fixtures. h. The "General office salaries" and "General office-other" relate to the overall management of Superior Markets, Incorporated If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person's compensation is $7,200 per quarter. Required: 1. How much employee salaries will the company avoid if it closes the North Store? 2. How much employment taxes will the company avoid if it closes the North Store? 3. What is the financial advantage (disadvantage) of closing the North Store? 4. Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? 5. Assume that the North Store's floor space can't be subleased. However, let's introduce three more assumptions. First, assume that if the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. Second, assume that the East Store has enough capacity to handle the Increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store? eBook Print Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Required 3 Required 4 Required 5 How much employee salaries will the company avoid if it closes the North Store? Employee salanes Required 1 Required 2 > Print Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Required 3 Required 4 Required 5 How much employment taxes will the company avoid if it closes the North Store? Employment taxes ces Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 What is the financial advantage (disadvantage) of closing the North Store? (Enter any "disadvantages" as a negative value.. Financial advantage (disadvantage) < Required 2 Required 4 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required S Assume that the North Store's floor space can't be subleased. However, let's introduce three more assumptions. First, assume that if the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store? (Enter any "disadvantages" as a negative value.) Financial advantage (disadvantage) < Required 4 Required 5 Show less A