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	$	3,100,000		$	700,000		$	1,240,000		$	1,160,000
Cost of goods sold		1,705,000			380,000			687,000			638,000
Gross margin		1,395,000			320,000			553,000			522,000
Selling and administrative expenses:
Selling expenses:		819,000			232,400			315,500			271,100
Administrative expenses		388,000			107,000			152,400			128,600
Total expenses		1,207,000			339,400			467,900			399,700
Net operating income (loss)	$	188,000		$	(19,400	)	$	85,100		$	122,300

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:

	Total		North Store		South Store		East Store
Selling expenses:
Sales salaries	$	240,400	$	69,000	$	86,600	$	84,800
Direct advertising		180,000		52,000		73,000		55,000
General advertising*		46,500		10,500		18,600		17,400
Store rent		305,000		86,000		121,000		98,000
Depreciation of store fixtures		16,500		4,700		6,100		5,700
Delivery salaries		21,300		7,100		7,100		7,100
Depreciation of delivery equipment		9,300		3,100		3,100		3,100
Total selling expenses	$	819,000	$	232,400	$	315,500	$	271,100

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store management salaries	$	71,500	$	21,500	$	30,500	$	19,500
General office salaries*		46,500		11,000		18,600		16,900
Insurance on fixtures and inventory		26,000		7,800		9,500		8,700
Utilities		109,545		32,910		41,380		35,255
Employment taxes		56,955		16,290		21,420		19,245
General office other*		77,500		17,500		31,000		29,000
Total administrative expenses	$	388,000	$	107,000	$	152,400	$	128,600

*Allocated on the basis of sales dollars.

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

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

d. 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 $10,000 per quarter. The general manager of the North Store would be retained at her normal salary of $11,000 per quarter. All other employees in the store would be discharged.

e. 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 $4,100 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.

f. The companys employment taxes are 15% of salaries.

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

h. 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 $5,500 per quarter.

Required:

1. Prepare a schedule showing the change in revenues and expenses and the impact on the companys overall net operating income that would result if the North Store were closed. (Any losses/ reductions should be indicated by a minus sign.)

Gross margin lsot if the store is closed
Costs that can be avoided;
Total costs that can be avoided