Rivera corporation runs two convenience stores, one in Chicago and one in Denver. Operating income for each store in 2017 is as follows. Each store faces different competitive challenges. In a senior management meeting you make the following statement, "we face three options: a) do nothing and keep both stores open, b) close the Denver store and keep the Chicago store, or c) keep Chicago and Denver open, and open a new store in Cleveland."

Your statement is based on an analysis where equipment has a zero disposal value and leased on an annual contract. A further estimate is that sales, product mix and variable cost in Cleveland and Denver will be approximately the same for the foreseeable future. Allocated corporate cost will not change by closing the Denver store and will increase by $4,000 with the Cleveland store.

In an effort to add value to the company you prepare three store segment reports and recommend a decision based on total profits.

Requirement: Circle your decision:

A: Do nothing B: Close the Denver Store C: Expand to Cleveland

Prepare three reports in proper formant on separate sheets showing the three options, supporting your decision assuming profit maximization is your basis in making the above statement. Add one paragraph on the bottom of the page for the respective option selected supporting your decision.

	Chicago	Denver
Revenue	$ 1,070,000	$ 860,000
Operating expenses
Cost of goods sold (all variable)	750,000	660,000
Store security system (contract, avoidable)	90,000	75,000
Labor costs (all variable)	42,000	42,000
Equipment lease (contract, avoidable)	25,000	22,000
Utilities (heating, cooling, all variable)	43,000	46,000
Allocated corporate overhead	50,000	40,000
Total operating expenses	1,000,000	885,000
Operating income (loss)	$ 70,000	$ (25,000)