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: Sales Superior Markets, Incorporated Income Statement For the Quarter Ended September 30 Total North Store South Store $ 3,180,000 $ 763,200 $1,272,000 Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses, Administrative expenses Total expenses Net operating income (loss) East Store $ 1,144,800 1,756,632 427,392 699,600 629,640 1,423,368 335,808 572,400 515,168 866,020 245,284 333,900 286,836 405,980 112,360 159,954 133,666 1,272,000 357,644 493,854 420,502 $151,368 $ (21,836) $ 78,546 $ 94,658 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: Selling expenses: Direct advertising Sales salaries General advertising Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total selling expenses "Allocated on the basis of sales dollars. Total $253,340 198,220 47,700 North Store South Store East Store $ 74,200 $ 94,340 $ 84,800 54,060 76,320 11,448 19,080 318,000 90,100 127,200 16,960 4,876 6,360 22,260 7,420 7,420 67,840 17,172 100,700 5,724 7,420 9,548 3,180 3,180 3,180 $ 866,020 $245,284 $333,900 $286,836 Total North Store South Store East Store Administrative expenses: Store managers' salaries General office salaries. Insurance on fixtures and inventory Utilities Employment taxes $ 74,200 $ 22,260 $31,800 $ 20,140 53,000 12,720 21,200 19,080 26,500 7,950 9,540 9,010 112,360 32,860 42,400 37,100 60,420 17,490 23,214 19,716 General office-others 79,500 19,080 31,800 28,620 Total administrative expenses $405,980 $112,360 $ 159,954 $133,666 "Allocated on the basis of sales dollars. "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 $11,660 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,720 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 Storm were closed. This person's salary is $4,240 per quarter. The delivery equipment would be distributed to the other stores. The does not wear out through use, but does eventually become obsolete. f. 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. ipment 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 $6,360 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 3 Required 4 Required 5 How much employee salaries will the company avoid if it closes the North Store? Employee salaries Required 2 > The company has one bell closed. This person's salary is $4,240 per quarter. The delivery equipment would be distributed to the BUT does not wear out through use, but does eventually become obsolete. The company pays employment taxes equal to 15% of their employees' salaries. One-third of the insurance in the North Store is on the store's fixtures. The "General office salaries" and "General office-other relate to the overall management of Superior Markets, Incorporo 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 $6,360 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 3 Required 4 Required S How much employment taxes will the company avoid if it closes the North Store? Employment taxes 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 $6.360 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 What is the financial advantage (disadvantage) of dosing the North Store? (Enter any disadvantages as a negative value) Financial advantage ock 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 Super Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of 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 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 dosed, 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.) Financial advantage (disadvantage)