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	$	3,960,000		$	950,400		$	1,584,000		$	1,425,600
Cost of goods sold		2,187,504			532,224			871,200			784,080
Gross margin		1,772,496			418,176			712,800			641,520
Selling and administrative expenses:
Selling expenses		1,078,440			305,448			415,800			357,192
Administrative expenses		505,560			139,920			199,188			166,452
Total expenses		1,584,000			445,368			614,988			523,644
Net operating income (loss)	$	188,496		$	(27,192	)	$	97,812		$	117,876

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:

1. 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	$	315,480	$	92,400	$	117,480	$	105,600
Direct advertising		246,840		67,320		95,040		84,480
General advertising*		59,400		14,256		23,760		21,384
Store rent		396,000		112,200		158,400		125,400
Depreciation of store fixtures		21,120		6,072		7,920		7,128
Delivery salaries		27,720		9,240		9,240		9,240
Depreciation of delivery equipment		11,880		3,960		3,960		3,960
Total selling expenses	$	1,078,440	$	305,448	$	415,800	$	357,192

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store managers' salaries	$	92,400	$	27,720	$	39,600	$	25,080
General office salaries*		66,000		15,840		26,400		23,760
Insurance on fixtures and inventory		33,000		9,900		11,880		11,220
Utilities		139,920		40,920		52,800		46,200
Employment taxes		75,240		21,780		28,908		24,552
General officeother*		99,000		23,760		39,600		35,640
Total administrative expenses	$	505,560	$	139,920	$	199,188	$	166,452

*Allocated on the basis of sales dollars.

1. The lease on the building housing the North Store can be broken with no penalty.

2. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.

3. 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 $14,520 per quarter. The general manager of the North Store would continue to earn her normal salary of $15,840 per quarter. All other managers and employees in the North store would be discharged.

4. 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 $5,280 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.

5. The company pays employment taxes equal to 15% of their employees' salaries.

6. One-third of the insurance in the North Store is on the stores fixtures.

7. 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 $7,920 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?