PROBLEM $12-26$ Close or Retain a Store LO$13-2$ 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 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:"Allocated on the basis of sales dollars. 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 $\backslash (\backslash$$ $11,000\backslash )$ per quarter. The general manager of the North Store would continue to earn her normal salary of $\backslash (\backslash$$ $12,000\backslash )$ 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 $\backslash (\backslash$$ $4,000\backslash )$ per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete. f$.$ The company pays employment taxes equal to $\backslash (15\backslash \%\backslash )$ of their employees' salaries. g$.$ One$-$third of the insurance in the North Store is on the store's fixtures. h$.$ The "General office salaries" and "General office$-$other" relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person's compensation is $\backslash (\backslash$$ $6,000\backslash )$ per quarter.