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please help asap ! Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for
please help asap !
Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: 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 recommendotion as to whether the store should be ciosed 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: The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to ciosing 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 avallable for your use: a. The breakdown of the selling and administrative expenses that are shown above is as follows: Allocated on the basis of sales dollars. "Allocated on the basis of sales dollars. Hlocated on the basis of sales dollars. b. The lease on the bullding 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 employere at a salary of \$11,600 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,600 per quarter. All other managers and employees in the North store would be discharged. e. The company has one delivery crew that serves al three stores. One delivery person could be discharged if the North Store were closed. This person's salary is $5,000 per quarter. The delivery equlpment would be distributed to the other stores. The equipment does not wear out through use, but does eventualy become obsolete. f. The compony pays employment taxes equal to 15% of thelr employees' salaries. 9. One-third of the insurance in the North Store is on the store's foxtures. h. The "General office salaries" and "General office-other" retate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workioad. This person's compensation is 56,300 per quarter. Required: 1. How much employee salaries will the company avold if it closes the North Store? 2. How much employment taxes will the company avold if it closes the North Store? 3. What is the finsncial 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 foor space can't be subleased. However, let's introduce three more ossumptions. 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 ciosing the North Store. Third, assume that the increased sales in the East Store would yleld the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, whot is the financiol advantoge (disodvantage) of closing the North Store? Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: 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 recommendotion as to whether the store should be ciosed 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: The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to ciosing 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 avallable for your use: a. The breakdown of the selling and administrative expenses that are shown above is as follows: Allocated on the basis of sales dollars. "Allocated on the basis of sales dollars. Hlocated on the basis of sales dollars. b. The lease on the bullding 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 employere at a salary of \$11,600 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,600 per quarter. All other managers and employees in the North store would be discharged. e. The company has one delivery crew that serves al three stores. One delivery person could be discharged if the North Store were closed. This person's salary is $5,000 per quarter. The delivery equlpment would be distributed to the other stores. The equipment does not wear out through use, but does eventualy become obsolete. f. The compony pays employment taxes equal to 15% of thelr employees' salaries. 9. One-third of the insurance in the North Store is on the store's foxtures. h. The "General office salaries" and "General office-other" retate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workioad. This person's compensation is 56,300 per quarter. Required: 1. How much employee salaries will the company avold if it closes the North Store? 2. How much employment taxes will the company avold if it closes the North Store? 3. What is the finsncial 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 foor space can't be subleased. However, let's introduce three more ossumptions. 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 ciosing the North Store. Third, assume that the increased sales in the East Store would yleld the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, whot is the financiol advantoge (disodvantage) of closing the North Store Step by Step Solution
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