Problem 12-26 Close or Retaln a Store fL012-21 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: 10 points Superior Markets, Inc Income Statement For the Quarter Ended September 38 South East tore Total Store Sales $3,38e, 808 $768,808 $1,328,e8 $1,228,8e8 671,808 549,808 goods sold 1,815,808 1,485,808 433,808 327,808 711,80e 689,8ee Selling and administrative expenses: Selling expenses Administrative expenses 272,108 133,608 485, 78e $ 264, (16,4 137,188 143,308 823,808 234,488 398,80e 189,888 343,488 316,588 155,488 471,98e Total expenses Net operating income (loss) 1,221,808 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: North Store South Store East Store Total Selling expenses Sales salaries Direct advertising General advertising Store rent Depreciation of store fixtures Delivery Depreciation of delivery $227,280 65,508 81,880 79,998 53,868 18, 38e 88,808 123,88 184,808 182,888 49,588 315,808 75,808 19,888 54,808 11,488 4,988 3,308 salaries 9,908 equ Total selling expenses $823,eee $234,488 $316,58 $272,188 Allocated on the basis of sales dollars. North Store South Store East Store Total Administrative expenses $ 74,580e 22,588 Store managers' salaries General office salaries Insurance on fixtures and inventory Utilities 31,508 28,588 19,888 18,588 39,548 21,e60 19 5036, g 49,588 28,8e8 187,535 55,965 18,38e 31,695 16,805 36, 308 18,988 3e,588 taxes General office-other Total administrative expenses $398,8ee $189,808 $155,488 $133,688 Allocated on the basis of sales dollars