Question 3 - Close or keep Open (25 points The most recent monthly income statement for Silly Stores is given below. Sales Variable expenses Contribution margin Traceable foed expenses Store segment margin Common foued expenses Net operating income Total $1,500,000 660.000 340,000 $80.000 260.000 240,000 $20.000 Store A $400,000 160.000 240,000 100.000 140.000 64000 $76.000 Store B $600,000 280.000 320,000 280.000 40.000 95.000 SI56.000 Store $500,000 220.000 280,000 200.000 R0.000 80.000 Due to its poor showing consideration is being given to closing Store B. Studies show that if Store Bis closed, one-fourth of its traceable fixed expenses will continue unchanged. The studies also show that closing Store B would result in a 10 percent increase in sales in Store A and a 15% increase in sales in Store C. The company allocates common foed expenses to the stores on the basis of sales dollars. However, 10% of the common fixed costs can be eliminated if store closes. 1. (10 points) Determine the monthly financial advantage (disadvantage) of closing Store B. 2. (5 points) What would be your recommendation to Silly Store's management? 3.(10 points) If the 25% of Store B'straceable foed expenses that remain unchanged are its lease payments, when would you want to reconsider your recommendation from question 2? Why