Please help me answer the following two questions

Footwear Stores Ltd operates three stores in Malaysia area. A segmented profit statement for the company for the last quarter is given below: Footwear Stores Ltd Profit statement for the quarter ended 30th June 2017 Particulars Total Amount East Store Central Store ($) Amount ($) Amount ($) Sales 4,000,000 800,000 2,000,000 Cost of goods sold 2,144,000 416,000 1,080,000 Gross margin 1,856,000 384,000 920,000 Operating expenses: Selling expenses 1,010,200 280,000 402,000 Administrative expenses 487,600 129,000 209,200 Net operating profit / loss 358,200 (25,000) 308,800 West Store Amount ($) 1,200,000 648,000 552,000 328,200 149,400 74,400 The East store has consistently shown losses over the past two years. For this reason, management is giving consideration to close the store. The company has retained 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 is as follows: Breakdown of selling expenses Particulars Total Amount East Store Central Store ($) Amount ($) Amount ($) Sales salaries 304,000 89,000 115,000 Direct advertising 241,000 65,000 96,000 General advertising* 60,000 12,000 30,000 Store rent 345,000 95,000 140,000 Depreciation of store 21,200 6,000 8,000 fixtures Delivery salaries 27,000 9,000 9,000 Depreciation of delivery 12,000 4,000 4,000 equipment Total selling expenses 1,010,200 280,000 402,000 * Allocated on the basis of sales West Store Amount ($) 100,000 80,000 18,000 110,000 7,200 9,000 4,000 328,200 Question 1 continued on page 2 Page 1 of 2 Question 1 continued West Store Amount ($) 26,000 21,000 10,000 Breakdown of administrative expenses Particulars Total Amount East Store Central Store ($) Amount ($) Amount ($) Store management 93,000 28,000 39,000 salaries General office salaries* 70,000 14,000 35,000 Insurance on fixtures and 30,500 10,000 10,500 inventory Utilities 130,000 38,000 50,000 Employment taxes 74,100 21,000 29,700 General office - other 90,000 18,000 45,000 expenses* Total administrative 487,600 129,000 209,200 expenses Allocated on the basis of sales 42,000 23,400 27,000 149,400 (b) The lease on the building housing the East store can be broken with no penalty. (c) The fixtures being used in the East store would be transferred to the other two stores if the East store were closed. (d) The general manager of the East store would be retained and transferred to another position in the company if the East store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $14,000 per quarter. The general manager of the East store would be retained at her normal salary of $15,000 per quarter. All other employees in the store would be discharged. (e) The company has one delivery crew that serves all three stores. One delivery person could be discharged if the East store were closed. This person's salary is $6,000 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) One-fourth of the insurance in the East store is on the store's fixtures. (g) The 'General office salaries' and 'General office - other expenses' relate to the overall management of Footwear Stores. If the East store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person's salary is $8,000 per quarter. (h) The employment taxes will reduce by $16,000 due to discharging employees. Required: (1) Prepare a schedule showing the change in revenues and expenses and the impact on the company's overall profit that would result if the East store were closed. Assuming that the store space can't be sub-leased, what recommendation would you make to the management of Footwear Stores? (2) Assume that if the East store were closed, at least one-fifth of its sales would transfer to the West store, due to strong customer loyalty to Footwear Stores. The West store has ample capacity to handle the increased sales. You may assume that the increased sales in the West store would yield the same gross margin rate as present sales in West store. What effect would these factors have on your recommendation concerning the East store? Show all computations to support your