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 $3,900,000 $ 820,000 $1,560,000 Cost of goods sold 2,145,000 480,000 829,000 Gross margin 1,755,000 340,000 731,000 Selling and administrative expenses : Selling expenses 835,000 240,400 319,500 Administrative expenses 428,000 115,000 164,400 Total expenses 1,263,000 355,400 483,900 Net operating income (loss) $ 492,000 $(15,400) $ 247,100 East Store $1,520,000 836,000 684,000 275, 100 148,600 423,700 260,300 $ 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 that are shown above is as follows: Total North Store South Store East Store Selling expenses: Sales salaries Direct advertising General advertising* Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total selling expenses $241,600 $ 56,800 174,000 60,000 58,500 12,300 305,000 94,000 20,500 5,500 23,700 7,900 $ 85,400 81,000 23,400 111,000 6,900 7,900 $ 99,400 33,000 22,800 100,000 8,100 7,900 11,700 $ 835,000 3,900 $ 240,400 3,900 $319,500 3,900 $275,100 *Allocated on the basis of sales dollars. North Store South Store East Store Total Administrative expenses: Store managers' salaries General office salaries* Insurance on fixtures and inventory Utilities Employment taxes General office-other* Total administrative expenses $ 83,500 58,500 34,000 93, 405 61,095 97,500 $ 428,000 $ 25,500 $ 34,500 12,300 23,400 10,200 13,500 31,125 31,320 15,375 22,680 20,500 39,000 $115,000 $164,400 $ 23,500 22,800 10,300 30,960 23,040 38,000 $ 148,600 *Allocated on the basis of sales dollars. 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 1 Required 2 Required 3 Required 4 Required 5 How much employment taxes will the company avoid if it closes the North Store? Employment taxes 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) Required 1 Required 2 Required 3 Required 4 Required 5 Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? O The North Store should be closed. The North Store should not be closed. 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)