Problem 11-26 (Algo) Close or Retain a Store [LO11-2] Supcrior Markets, incorporated, operates throe stores in a targe metropolitan area. A segmentod absorption costing income statement for the company for the last quarter is given below: The North Store has consistenty shown losses over the past two years. For this reason, manegement is giving consideration to closing the store IThe company has asked you to make a recommendation as to whether the store should be closed or kept open. The following addational information is available for your use. a. The breakdown of the selling and administrative expenses that are shown above is as follows: b. The lease on the bulding housing the North Store can be broken with no penaity. c. The fortures being used in the North Store would be tranderred to the other two stores if the North Store wore closed. d. The general manager of the North Stone would be retained and transferred to another position in the company if the North Store were closed She would be falling a postion that would otherwise be filled by hining a new employee at a salary of $14,960 per quarter. The general manager of the North Store would consinue to carn her normal salary of 516,320 per quarter. All other managers and employees in the North store would be discharged. e. The company has one delvery crew that serves all thee stores. One delivery person could be ofischargod if the North Store were. closed. This person's salary is $,440 per quarter. The delivery equipment would be distributod to the other stores. The equipment does pot wear out through use, but does eventually bocome obsolete. t The company pays employment taxes equal to 15% of their employoes' salaries: g Ore-third of the insurance in the North Store is on the store's fixtures. Ih. The "General office salaries" and "General office-other" relate to the overall mansgement of Superior Markets, incorporated if the North Store were elosed, one person in the general office could be discharged because of the decrease in owerall workload. This person's compensation is $8,160 per quarter. Required: 1. How much employee salaries will the company avoid if it closes the North Store? 2. How much eaployment taxos will the company avoid if it closes the North Store? 3. What is the financial advantage (clisachantage) of closing the North Store? 4. Assuming that the North Store's floor spoce can't be subleased, would you recommend closing the Nonth Store? 5 Assume that the North Store's floor space can't be subleased. Howeves, let's introduce three more assumptions. First, assume that if the North Shore 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 copocity to handlo the increased sales that would arise from closing the North Stare. Third, assume that the increased sales in the East Store would yieid the same gross margin as a percentage of saies as North Store. Third, assume that the increased sales in the East Store would yleld the same gross margin as a percentage of soles as present sates in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store? Complete this question by entering your answers in the tabs below. How much employee solaries will the company avold if it closes the North Store