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 Total North Store South Store East Store Sales $ 4,020,000 $ 964,800 $ 1,608,000 $ 1,447,200 Cost of goods sold 2,220,648 540,288 884,400 795,960 Gross margin 1,799,352 424,512 723,600 651,240 Selling and administrative expenses Selling expenses 1,094,780 310,076 422,100 362,604 Administrative expenses 513,220 142,040 202,206 168,974 Total expenses 1,608,000 452,116 624,306 531,578 Net operating income (loss) $ 191,352 $ (27,604 ) $ 99,294 $ 119,662 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 The breakdown of the selling and administrative expenses that are shown above is as follows Total North Store South Store East Store Selling expenses Sales salaries $ 320,260 $ 93,800 $ 119,260 $ 107,200 Direct advertising 250,580 68,340 96,480 85,760 General advertising 60,300 14,472 24,120 21,708 Store rent 402,000 113,900 160,800 127,300 Depreciation of store fixtures 21,440 6,164 8,040 7,236 Delivery salaries 28,140 9,380 9,380 9,380 Depreciation of delivery equipment 12,060 4,020 4,020 4,020 Total selling expenses $ 1,094,780 $ 310,076 $ 422,100 $ 362,604 Allocated on the basis of sales dollars Total North Store South Store East Store Administrative expenses Store managers' salaries $ 93,800 $ 28,140 $ 40,200 $ 25,460 General office salaries 67,000 16,080 26,800 24,120 Insurance on fixtures and inventory 33,500 10,050 12,060 11,390 Utilities 142,040 41,540 53,600 46,900 Employment taxes 76,380 22,110 29,346 24,924 General officeother 100,500 24,120 40,200 36,180 Total administrative expenses $ 513,220 $ 142,040 $ 202,206 $ 168,974 Allocated on the basis of sales dollars The lease on the building housing the North Store can be broken with no penalty The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed 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 $14,740 per quarter The general manager of the North Store would continue to earn her normal salary of $16,080 per quarter All other managers and employees in the North store would be discharged The company has one delivery crew that serves all three stores One delivery person could be discharged if the North Store were closed This persons salary is $5,360 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 The company pays employment taxes equal to 15 of their employees' salaries One third of the insurance in the North Store is on the stores fixtures The General office salaries and General officeother 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 persons compensation is $8,040 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 cant be subleased, would you recommend closing the North Store 5 Assume that the North Store's floor space cant be subleased However, let's introduce three more assumptions First, assume that if 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 sales 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 Store Store 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 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 avoid if it closes the North Store mployment taxes 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) Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Required 5 Assume that the North Store's floor space can't be subleased However, let's introduce three more assumptions First, assume that if 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 sales 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 Store (Enter any disadvantages as a negative value ) Show less Financial advantage (disadvantage)

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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
	Total		North Store			South Store		East Store
Sales	$	4,020,000	$	964,800		$	1,608,000	$	1,447,200
Cost of goods sold		2,220,648		540,288			884,400		795,960
Gross margin		1,799,352		424,512			723,600		651,240
Selling and administrative expenses:
Selling expenses		1,094,780		310,076			422,100		362,604
Administrative expenses		513,220		142,040			202,206		168,974
Total expenses		1,608,000		452,116			624,306		531,578
Net operating income (loss)	$	191,352	$	(27,604	)	$	99,294	$	119,662

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:

The breakdown of the selling and administrative expenses that are shown above is as follows:

	Total		North Store		South Store		East Store
Selling expenses:
Sales salaries	$	320,260	$	93,800	$	119,260	$	107,200
Direct advertising		250,580		68,340		96,480		85,760
General advertising*		60,300		14,472		24,120		21,708
Store rent		402,000		113,900		160,800		127,300
Depreciation of store fixtures		21,440		6,164		8,040		7,236
Delivery salaries		28,140		9,380		9,380		9,380
Depreciation of delivery equipment		12,060		4,020		4,020		4,020
Total selling expenses	$	1,094,780	$	310,076	$	422,100	$	362,604

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store managers' salaries	$	93,800	$	28,140	$	40,200	$	25,460
General office salaries*		67,000		16,080		26,800		24,120
Insurance on fixtures and inventory		33,500		10,050		12,060		11,390
Utilities		142,040		41,540		53,600		46,900
Employment taxes		76,380		22,110		29,346		24,924
General officeother*		100,500		24,120		40,200		36,180
Total administrative expenses	$	513,220	$	142,040	$	202,206	$	168,974

*Allocated on the basis of sales dollars.

The lease on the building housing the North Store can be broken with no penalty.
The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.
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 $14,740 per quarter. The general manager of the North Store would continue to earn her normal salary of $16,080 per quarter. All other managers and employees in the North store would be discharged.
The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This persons salary is $5,360 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.
The company pays employment taxes equal to 15% of their employees' salaries.
One-third of the insurance in the North Store is on the stores fixtures.
The General office salaries and General officeother 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 persons compensation is $8,040 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 cant be subleased, would you recommend closing the North Store?

5. Assume that the North Store's floor space cant be subleased. However, let's introduce three more assumptions. First, assume that if 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 sales 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 Store?

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Store? 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 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 avoid if it closes the North Store? mployment taxes 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) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Assume that the North Store's floor space can't be subleased. However, let's introduce three more assumptions. First, assume that if 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 sales 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 Store? (Enter any "disadvantages" as a negative value.) Show less Financial advantage (disadvantage)