Ramirez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: Click to view the operating income for the stores.) (Click the icon to view the add-or-drop segments information.) Read the requirements Requirement 1. By closing down the Rhode Island store, Ramirez can reduce overall corporate overhead costs by $42,000. Calculate Ramirez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Ramirez's operating income if it closes the Rhode Island store. (Complete all answer boxes. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sian.) (Loss in Revenues) Savings in Costs Requirements Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs 1. By closing down the Rhode Island store, Ramirez can reduce overall corporate overhead costs by $42,000. Calculate Ramirez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Ramirez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $18,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $3,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Print Done Effect on operating income (loss) Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Lopez is that Ramirez Corporation's operating income would increase if it closes down the Rhode Island store as shown by the analysis above. Note that by closing down the Rhode Island store, Ramirez Corporation will save none of the because this is a past cost. Requirement 2. Calculate Ramirez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $18,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $3,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Begin by calculating Ramirez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store. (If the net effect is an operating loss, enter the amount with parentheses or a minus sign.) Begin by calculating Ramirez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store. (If the net effect is an operating loss, enter the amount with parentheses or a minus sign.) Incremental Revenues (Incremental Costs) Data table Connecticut Rhode Island Store Store S 1,130,000 $ 900,000 Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss) 720.000 700,000 86,000 77,000 Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead 48,000 43,000 27,000 18,000 43,000 51,000 49,000 36,000 Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? 975,000 Total operating costs 923,000 Lopez is that Ramirez Corporation's operating income would increase if it adds another store like the Rhode Island store as shown by the analysis above. $ 155,000 $ (23,000) Operating income (loss)