Perez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2014

is as follows:

	Connecticut Store	Rhode Island Store
Revenues	$ 1,040,000.00	$ 850,000.00
Operating Costs:
COGS	$ 775,000.00	$ 690,000.00
Lease Rent	$ 90,000.00	$ 72,000.00
Labor Costs	$ 45,000.00	$ 45,000.00
Depreciation of Equipment	$ 24,000.00	$ 25,000.00
Utilities	$ 43,000.00	$ 52,000.00
Allocated corporate Overhead	$ 49,000.00	$ 37,000.00
Total Operating Costs	$ 1,026,000.00	$ 921,000.00
Operating Income	$ 14,000.00	$ (71,000.00)

The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Perez Corporation, makes the following comment,Perez

can increase its profitability by closing down the Rhode Island store." Is Maria Lopez Correct?

Requirement: By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $42,000. Calculate Perez's operating income if it closes the Rhode Island store. Is MariaLopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Perez's operating income if it closes the Rhode Island store.

	Savings in Costs (Loss in Revenues)
Revenues
Operating Costs:
Cost of goods sold
Lease Rent
Labor Costs
Depreciation of Equipment
Utilities
corporate Overhead
Total Operating Costs
Operating Income

Lopez is correct or incorrect?