Superior Markets, Incorporated Income Statement For the Quarter Ended September 30 Total North Store South Store East Store Sales $3,600,000 $ 864,000 $ 1,440,000 $ 1,296,000 Cost of goods sold 1,988,640 483,840 792,000 712,800 Gross margin 1,611,360 380,160 648,000 583,200 Selling and administrative expenses: Selling expenses 980,400 277,680 378,000 324,720 Administrative expenses 459,600 127,200 181,080 151,320 Total expenses 1,440,000 404,880 559,080 476,040 Net operating income (loss) $ 171,360 $ (24,720) $88,920 $ 107,160 The North Store has consistently shown losses over the past two years, so management is considering closing this store. a. A detailed breakdown of the selling and administrative expenses shown above is as follows: Total North Store South Store East Store Selling expenses: Sales salaries $ 286,800 $ 84,000 $ 106,800 $ 96,000 Direct advertising 224,400 61,200 86,400 76,800 General advertising* 54,000 12,960 21,600 19,440 Store rent 360,000 102,000 144,000 114,000 Depreciation of store fixtures 19,200 5,520 7,200 6,480 Delivery salaries 25,200 8,400 8,400 8,400 Depreciation of delivery equipment 10,800 3,600 3,600 3,600 Total selling expenses $ 980,400 $ 277,680 $ 378,000 $ 324,720 b. *Allocated on the basis of sales dollars. Total North Store South Store East Store Administrative expenses: Store managers' salaries $ 84,000 General office salaries* 60,000 $ 25,200 14,400 $ 36,000 $22,800 24,000 21,600 Insurance on fixtures and 30,000 9,000 10,800 10,200 inventory Utilities 127,200 37,200 48,000 42,000 Employment taxes 68,400 19,800 26,280 22,320 General office-other* 90,000 21,600 36,000 32,400 Total administrative expenses $459,600 $ 127,200 $181,080 $151,320 c. *Allocated on the basis of sales dollars.