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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 TotalNorth Store South Store East Store 2,055,600537,600 792,000726,000 ,664,400 422,400 648,000 594,000 Sales Cost of goods sold $3,720,000 $960,000 $1,440,000 $1,320,000 Gross margin Selling expenses Administrative expenses 046,200 308,200 390,600 347,400 538,260155,080204,220 178,960 1,584,460 463,280 594,820526,360 $ 79,940 $ (40,880) $ 53,180 S 67,640 Total expenses 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 NorthSouth East Store Store Store Selling expenses Sales salaries Direct advertising General advertising Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment s 311,000 $ 94,000 $113,000 $104,000 223,00063,000 84,000 76,000 55,80014,40021,600 19,800 36,000 97,000 132,000 107,000 36,400 11,80012,000 12.600 57,00019,000 19,000 19,000 27,000 9,000 9,000 9,000 Total selling expenses $1,046,200 $308,200 $390,600 $347,400 Allocated on the basis of sales dollars. TotalStore StoreStore e expenses Store management salaries General office salaries Insurance on futures and inventory Utilities Employment tanes General office-other $ 106,000 $ 33,000 $ 42,000 $ 31,000 74,400 19,200 28,800 26,400 40,600 11,100 15,000 14,5 142,000 43,000 52,000 47,000 82,26024,780 30,420 27,060 93,000 24,000 36,000 33,000 Total administrative expenses $ 538,260 $155,080 $204 220 $178,960
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