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:

Problem 7-26 Close or Retain a Store LO7-2] 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: Superior Markets, Inc. ncome Statement For the Quarter Ended September 30 East North Store Store Store Sales $4,200,000 $840,000 $1,680,000 $1,680,000 Cost of goods sold 2,310.000 500,000 886,000 924,000 Gross margin 890,000 340,000 794,000 756,000 Selling and administrative expenses: Selling expenses 841,000 243,400 321,000 276,600 Administrative expenses 443.000 8,000 68,900 156,100 Total expenses .284.000 361,400 489,900 432,700 606,000 (21,400 304,100 323,300 Net operating income (loss) 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 is as follows: Selling expense 256,800 68,600 78,200 110,000 177,000 63,000 84,000 30,000 63,000 2,600 25,200 25,200 285,000 81,000 114,000 90,000 Sales salaries Direct advertising General advertising Store rent Depreciation of store fixtures 22,000 5,800 7,200 9,000 Delivery salaries 8,200 8,200 8.200 24,600 Depreciation of delivery equipment 2,600 4,200 4,200 4,200 841,000 243,400 321,000 276,600 Total selling expenses