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. Income Statement For the Quarter Ended September 30 North Store South Store East Store Total Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses: Administrative expenses Total expenses Net operating income (loss) $4,100,000 $860,000 $1,640,000 $1,600,000 2,255,000 1,845,000 515,000 345,000 860,000 780,000 880,000 720,000 839,000 438,000 1,277,000 242,400 117,000 359,400 320,500 167,400 487,900 276,100 153,600 429,700 $ 568,000 14,400) 292,100 290,300 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: North Store South Store East Store Total Selling expenses: Sales salaries Direct advertising General advertising Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total selling expenses $ 263,400 69,600 $80,600 S 113,200 31,000 24,000 87,000 8,700 8,100 4,100 $ 839,000 242,400 320,500 276,100 176,000 61,500 280,000 21,500 24,300 12,300 62.000 12,900 80,000 5,700 8,100 4,100 83,000 24,600 113,000 7,100 8,100 4,100