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 Coat of goods sold Total 94.400.000 2,420,000 1.980.000 store 1 .000 $25,000 55.000 Store 1.760.000 927.000 833,000 750.000 968,000 792.000 Belling and administrative 845,000 245.400 322.000 M inistrative expenses 1.298,000 682,000 365.400 (10,400) 493,900 339.100 277,600 161,100 438.200 353,300 Net operating income (los) $ 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: $243,600 $ 65,400 73.400 $10,00 Deltiot store text 845.000 245.00 72.0 27.500 MacBook Air v BNM U. UIC MILII Duval laye fubduvalidge 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. First, assum the North Store were closed, one-fourth of Its sales would transfer to the East Store, due to strong customer loyalty to Superio Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from closing North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sa present sales in the East store. Glven these new assumptions, what is the financial advantage (disadvantage) of closing the No 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 Required 2 > -- - S UICIUL SIIe 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 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 the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentag present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing Store? 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, assum 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 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)
