Required:

1. How much employee salaries will the company avoid if it closes the North Store?

2. How much employment taxes will the company avoid if it closes the North Store?

3. What is the financial advantage (disadvantage) of closing the North Store?

4. Assuming that the North Store's floor space cant be subleased, would you recommend closing the North Store?

5. Assume that the North Store's floor space cant be subleased. However, let's introduce three more assumptions. First, assume that if the North Store 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 capacity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store?

Check my work 1 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. 20 points cBook Superior Markets, Inc. Ircone Statenent For the Quarter Ended September 30 Horth South Zast Total Score Store Store $4,023,con 3964,R00 $1,508,000 $1,447,200 Cass of youde sold 2,220,647 540,288 884,400 795, 960 Gross margin 1,799,352 424,512 723,600 651, 240 Scaling and administrative expenses: Salling Ampereen 1,004,780 310.07 422,100 362, 604 Administrative expen 513,220 142,040 202,206 168, 974 Total expensea 1,603,000 452, 116 624, 306 531,578 Netrating in con 1108) $191,52 $(27,5001 $ 99,294 $ 119,662 Print G RatarCAS 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 SLOTA Beat Stars Total Selling XHHH: Sulee salaries Direct advertising Ceneral advertising store rert Depreciation of stare cixtures Dall very salaries Degreciation of delivery gaporess Total selling expansea $ 320,260 $ 93,800 $119,260 $107,200 250, 580 60,310 96, 180 85,760 60, 300 24,472 22,120 21,700 402,000 112, 900 160, 300 127,300 21,440 8,040 7,236 28, 140 1,380 9,380 9380 12,360 1,320 1,020 0,020 $1,091,780 $310,996 $422,100 $362,609 *Allocated on the basis of sales dollars Check my work 1 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. 20 points cBook Superior Markets, Inc. Ircone Statenent For the Quarter Ended September 30 Horth South Zast Total Score Store Store $4,023,con 3964,R00 $1,508,000 $1,447,200 Cass of youde sold 2,220,647 540,288 884,400 795, 960 Gross margin 1,799,352 424,512 723,600 651, 240 Scaling and administrative expenses: Salling Ampereen 1,004,780 310.07 422,100 362, 604 Administrative expen 513,220 142,040 202,206 168, 974 Total expensea 1,603,000 452, 116 624, 306 531,578 Netrating in con 1108) $191,52 $(27,5001 $ 99,294 $ 119,662 Print G RatarCAS 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 SLOTA Beat Stars Total Selling XHHH: Sulee salaries Direct advertising Ceneral advertising store rert Depreciation of stare cixtures Dall very salaries Degreciation of delivery gaporess Total selling expansea $ 320,260 $ 93,800 $119,260 $107,200 250, 580 60,310 96, 180 85,760 60, 300 24,472 22,120 21,700 402,000 112, 900 160, 300 127,300 21,440 8,040 7,236 28, 140 1,380 9,380 9380 12,360 1,320 1,020 0,020 $1,091,780 $310,996 $422,100 $362,609 *Allocated on the basis of sales dollars