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 Total Store Store Store Sales $4,600,000 $920,000 $1,840,000 $1,840, eee Cost of Roods sold 2,530,000 565,000 953, eee 1,012, eee Gross margin 2,070,000 355,000 887,000 828,000 Selling and administrative expenses Selling expenses 849,000 247, 480 323,000 278,600 Administrative expenses 463,000 122,00 174,900 166,100 Total expenses 1,312,000 369,400 497.989 444,700 Net operating income (Loss) $758,000 $(14,400) $ 389,100 $38), 100 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: Total North Store South Store Store Selling expenses! Sales salaries Direct advertising General advertising Store rent Depreciation of store Fixtures Delivery salaries Depreciation of delivery equipment Total selline expenses $230,400 181,000 69,000 305,000 24,000 25,500 13.800 $ 62,00 67,000 13,000 85,000 6.200 8,600 4.600 $247.600 $ 68,600 38.000 27.600 118,000 7.600 3,60 4.600 $325,000 5.99.600 26.000 22.600 102,000 10,200 8,600 4.600 $278.600 5549,000 "Allocated on the basis of sales dollars North South Total North Store South Store East Store Administrative expenses: Store managers' salaries General office salaries Insurance on fixtures and inventory Utilities Employment taxes General office-other Total administrative expenses "Allocated on the basis of sales dollars. $ 94,000 69,000 41,000 81,120 62,880 115,000 $463,000 $ 29,00 5 38,000 13,800 27,600 12,300 17,000 26,860 24,880 17,040 21,420 23,000 46,000 $122,888 5174,900 $ 27,000 27,6ee 11,700 29, 380 24,420 46,000 $166,109 ces b. The lease on the building housing the North Store can be broken with no penalty c. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed d. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $12.800 per quarter. The general manager of the North Store would continue to earn her normal salary of $13,800 per quarter. All other managers and employees in the North store would be discharged. e The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed, This person's salary is $5,600 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete. 1. The company pays employment taxes equal to 15% of their employees' salaries 9. One-third of the insurance in the North Store is on the store's fixtures. h The General office salaries and General office-other relate to the overall management of Superior Markets, Inc. If 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 $6,900 per quarter Required: 1. How much employee sataries 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 Stores floor space can't be subleased, would you recommend closing the North Store? 5. Assume that the North Store's floor space can't be subleased. However, let's Introduce three more assumptions. First assume that it 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 soles 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 Storey Complete this question by entering your answers in the tabs below. de w 25. CRNX M SmartBook 20; Welcome Back Assignments: ACG 2071 to.mheducation.com/ext/map/indiox.tml?_con=con&external_beciwierialaunch quarter the general manager of the North Store would continue to earn her normal sa managers and employees in the North store would be discharged e. The company has one delivery crew that serves all three stores. One delivery person co dosed. This person's salary is $5600 per quarter. The delivery equipment would be det does not wear out through use, but does eventually become obsolete 1. The company Days employment is equal to 15% of the employees salaries One-third of the surnace in the North Store is on the store's fatures In The "General office salaries and General office other relate to the overal management Store were closed, one person in the general office could be discharged because of the compensation is $6 900 per Quarter Required: How much employee salaries with company avoid fit closes the Norm Store 2. How much employmentes will the company avoid it closes the North Store! 3. What is the financial advantage disadvantages of closing the North Store! 4 Assuming the North Store's for space can't be based would you recommend clos Assume thon se Norm Stoles for space can be used However les introduce three North Store were detectone fourtholine World Tranfer to the list Store, we do stro Market Second assume that the East Store has enough capacity to handle the increased sales North Stone Thiedssume that the increased sales in the first store woulded the same grose present sales in the stove these motions, what is the ancial advantage Complete this question by entering your answers in the tabs below wenyewe > Type here to search O w E R s D LU F x / 2 * B heducation.com/ext/up/index.html?.com contemal browser a0&laun quarter the general manager of the North Store would continue to earn her normal managers and employees in the North store would be discharged The company has one delivery crew that serves all three stores. One delivery person closed. This person's salary is $5.600 per quarter. The delivery equipment would be de does not wear out through use, but does eventually become obsolete 1. The company pays employment taxes equal to 15% of their employees salaries, 9.One-third of the insurance in the North Store is on the store's fixtures The "General office salaries and General office-other relate to the overal managem Store were closed, one person in the general ottice could be discharged because of the compensation is $6,900 per quarter 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 can't be subieased would you recommend 5. Assume that the North Store's floor space can be sableased. However let's introduce the the North Store were closedone fourth of sales would transfer to the East Store due to Markets. Second, assume that the Fast Store has enough capacity to handle the increased sa North Store. Thidastume that the increased sales in the East Store would vild the same gron present sales in the store. Given these new assumptions What is the financial advantage Stoco Complete this question by entering your answers in the tabs below Bertot How must be company with St