- Superior Markets, incorporated operates three stores in a large metropolitan area. A segmented absorption costing Income statement for the company for the last quarter is given below superlar Harves, Tncorporated Incone Statenent For the Quarter Ended Setember Tetat North Store South Store East Store Sates 13.900.000 5.336,000 $1,560,000 5 1,400,000 Cost of geeds sold 2,154,360 524,260 B58, ed 772,200 Gross margin 1.745,640 411,840 282, cea 631, Selling and administrative expensest Selling expenses 1,062,160 300,620 489,50 351,750 Administrative expenses 492.900 137. Bee 196,170 163,930 Total expenses 1.560.000 439.520 GOS,670 515,210 Net operating income (less) $185,640 $ 126,788) $ 96,330 $116,090 The North Store has consistently shown losses over the past two years. For this reason, management is giving consideratich 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: 66,300 Selling capenses Sales salaries Direct advertising General advertising Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total setting expenses "Allocated on the basis of sales dollars Total 5 310,700 243,100 58.500 390,000 20,00 27,300 11,700 $1.662,100 North Store South Store East Store $91,000 $ 115,70 5 124.000 93,660 89,200 14.040 23,400 21.06 110,500 156,000 123, see 5,980 7.600 7,620 9,100 9,100 3.900 3.900 3,900 $ 38,820 5429.500 $ 351,750 9.100 "Allocated on the basis of sales dollars. Total North Store South Store East Store Administrative expenses Store managers salaries General office salaries Insurance on fixtures and inventory Utilities Employment taxes General office-other Total administrative expenses "Allocated on the basis of sales dollars. $ 91,00 65,800 32,500 137,800 74,100 97,500 $ 497,980 $ 27,300 15,600 9,750 40,300 21,450 23,400 $ 137,880 $ 39,000 26, cee 11,700 52,000 28,470 39, eee $ 196,170 $ 24,700 23,400 11.050 45,500 24,180 35, 100 $ 163,930 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 $14,300 per quarter. The general manager of the North Store would continue to earn her normal salary of $15,600 per quarter. All other managers and employees in the North 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 person's salary is $5,200 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. The company pays employment taxes equal to 15% of their employees' salaries. g. One-third of the insurance in the North Store is on the store's fixtures. h. The "General office salaries" and "General office-other relate to the overall management of Superior Markets, Incorporated If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This person's compensation is $7.800 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 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, 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required Required 4 Required 5 How much employee salaries will the company avoid of it closes the North Store? If Required 2 > 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 can't be sublessed, would you recommend closing the North Store? 5. Assume that the North Store's floor space can't be sublessed. 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required How much employment taxes will the company avoid if it closes the North Store? Emniyet Required Required) Required 1. How much employee salaries will the company avoid if it closes the North Store? 2. How much employment taxes will the company avold 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, 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? Complete this question by entering your answers in the tabs below. Required Required 2 require Required Required What is the financial advantage (disadvantage) of closing the North Store7 Center any disadvantages as a negative value.) LA U yum Required: 1. How much employee salaries will the company avoid if it doses 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 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, 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 yoeld 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Reored Required Assuming that the North Store's floor space cant be subleased, would you recommend closing the North Store? The North Store should be closed The North Store should not be closed