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 Total Store Store Sales $3,180,000 $763,200 $1,272,000 Cost of goods sold 1,756,632 427,392 699,600 Gross margin 1,423,368 335,000 572,400 Selling and administrative expenses Selling expenses 166,020 245, 286 333,900 Administrative expenses 405, 950 112,360 159,954 Total expenses 1.222.000 357,614 493,856 Het operating income (10) $ 151,368 $(21,836) $ 78,546 East Store $1,141,800 629,640 515,160 286,836 $ 420,502 14,658 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: a. The breakdown of the selling and administrative expenses that are shown above is as follows: North South Store East Store Total Store 8 01.041 Selling expenses: Sales salaries Direct advertising General advertising" Store rent Depreciation of store fixtures Delivery Salaries Depreciation of delivery edient Total selling expenses $253,340 $ 14, 203 108,220 54,060 47,700 11,8 $13,000 0,100 16,960 4,876 22,260 7,420 9.540 3,180 $1,6205245,284 $ 94,340 76,320 19,080 127,200 6,360 7.420 3,1150 5 84,100 67,840 17.172 100,700 5,724 7,420 3,180 $206,836 $333,0 Allocated on the basis of sales dollars. North South East St Aministrative expenses Store moneteralaries General Fice salaries Insurance on fixtures and inventory Utilities Geral office-othar Total administrative expenses 14,200 55.000 26,500 112,360 0,420 $ 22,200 11.000 $ 20,140 12,720 21,200 19.00 7.950 9.540 9.010 32,060 42,00 37.100 17.490 23,214 19.716 19.00 31 $112.260 $15.956$132.666 5.495,950 "Allocated on the basis of sales dollars b. The case 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 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 dosed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of S11660 per quarter. The general manager of the North Store would continue to earn her normal salary of $12.720 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 $4.240 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. n. 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 $6.360 per quarter. 21 Required: 1. How much employee salaries will the company avoid in it closes the North Store? 2. How much employment taxes will the company avold if it doses the North Store? 3. What is the tinandal advantage disadvantage of closing the North Store? 4. Assuming that the North Store's 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 Flist, assume that I the North Store were dosed, 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 sales that would arise from closing the North Store. Thund, assume that the increased sales in the Last 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 Store? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 How much employee salaries will the company avoid if it closes the North Store? Employee salaries 107,240 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required, 5 How much employment taxes will the company avold if it closes the North Store? $ Employment taxes 16 086 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 What is the financial advantage (disadvantage) of closing the North Store? (Enter any disadvantages" as a negative value.) Financial advantage disadvantage S (30.162)