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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
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 Income Statement For the Quarter Ended September 30 North South East Tota Store Store Store Sales $4,600,000 $920,000 $1,840,000 $1,840,000 Cost of goods sold 2,530,000 565.000 953.000 1.01 2,070,000 355.000 887.000 828.000 Gross margin Selling and administrative expenses: 323,000 849,000 278,600 Selling expenses 247,400 463,000 22,000 174,900 Administrative expenses 166.100 1,312,000 369.400 497.900 444,700 Total expenses 758,000 (14,400) 389.100 383,300 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: Total Selling expenses $230,400 200 68,600 99,600 Sales salaries 181,000 26,000 Direct advertising 67.000 88.000 27,600 General advertising* 69.000 13.800 27.600 305,000 Store rent 85.000 118.000 02.000 24,000 Depreciation of store fixtures 6.200 7.600 0.200 Delivery salaries 25.800 8.600 8.600 8.600 Depreciation of delivery equipment 13.800 4.600 4.600 4.60
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