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Super Marke Incorporated operates the stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter
Super Marke Incorporated operates the stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below Superter Markets, Incorporate Income Statement For the Quarter Ended September 38 Norts Stere South Stere 21,400 $1,536,000 fast Stare $1,42,4 Cast at goods Grass sargin Setting and sinistrative expenses: Selling expenses T Net operating income (l) $3,840,000 EXTINTE 3.30, 104 $16,996 1,045,7 346,3 19.240 3383,794 115,440 193,352 31.07 316-952 19773 (36,348) 1H, 114,304 The North Store has consistently shown losses over the past two years, so management is considering closing this store A detailed breakdown of the selling and administrative expenses shown above is as follows Sales salarie Direct advertising Several advertising Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total selling expe Allocated on the basis of sales dollars 305,920 239,3 113,000 81,920 57,600 384,000 29,736 300,0 153,00 121,6 20,400 26,0 1,40 6,912 11,520 3,048 $1,043,700 $296,192 483,200 346,368 North Ster South Store East Ste 19,00 33, 33,33 General affice salaries Insurance on retures and inventary 64,000 15,364 32, 1,00 135,40 31,400 $1,200 Employment taxe 44,000 General office-others Tatal administrative ess Allocated on the basis of sales dollars 21,128 2X48 40,248 $183,133 163,408 The North Store's rectal agreement can be broken with no penalty The North Store's fixtures would be transfened to the other two stores if it were closed The North Store's general manager would be transfemed to another position in the company if were closed. She would position that otherwise would have required hiring a new employee at a salary of $34,080 per quarter The general manager of the North Stone would cartinue to ear her normal salary of $15.360 per quarter. All other manegers and employees in the North Ste would be discharged The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Stone were closed. This person's salary is $5120 per quarter. The delivery equipment would be distributed to the other stores. The equit does not wear out through use The company pays employment taxes equal to 15% of their employees salaries One-third of the North Stone's insurance relates to its fixtures The "General office salaries" and "General office-other relate to the overall management of Superior Markets, corporated the North Store were closed one person in the general office could be discharged because of the decrease in overall workload. This person's compensation is $7580 per quarter How much employee sale 2. How much employment taxes y avoid if closes the North Store y avoid if it closes the North Store 3. What is the financial advantage (disadvantage of closing the North Store 4. Assuming the North Stone's foor space can't be subleased, would you recommend closing the North Store 5. Assume the North Showers floor space can't be subleased However ler's introduce three more assumptions First, if the North Store were closed, one fourth of as sales would transfer to the East Store due to strong customer loyalty to Superior Markets Second, the Cast Store has enough capacity to handle the a used sales that would arise from closing the North Sore. Third, the increased new assumptions, what is the financial adv advantage of closing the North Store Answer is complate but est entirely correct Required
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