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 Cost of goods sold Selling expenses Gross margin Selling and administrative expenses: Administrative expenses Total expenses Net operating income (loss) Superior Markets, Incorporated Income Statement Total $ 3,780,000 2,088,072 1,691,928 For the Quarter Ended September 30 North Store $ 907,200 508,032 South Store $ 1,512,000 831,600 East Store $ 1,360,800 748,440 399,168 680,400 612,360 291,564 396,900 340,956 133,560 190,134 158,886 425,124 587,034 499,842 $ 179,928 $ (25,956) $ 93,366 $ 112,518 1,029,420 482,580 1,512,000 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: Total North Store South Store East Store $ 301,140 235,620 56,700 $ 88,200 64,260 13,608 $ 112,140 90,720 22,680 $ 100,800 80,640 20,412 378,000 107,100 151,200 119,700 20,160 5,796 7,560 6,804 26,460 8,820 8,820 8,820 11,340 3,780 3,780 3,780 $ 291,564 $ 396,900 $ 340,956 Sales salaries Direct advertising General advertising* Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment Total selling expenses *Allocated on the basis of sales dollars. 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. $ 1,029,420 133,560 71,820 94,500 Total North Store South Store East Store $ 88,200 63,000 $ 26,460 15,120 $ 37,800 $ 23,940 25,200 22,680 31,500 9,450 11,340 10,710 39,060 50,400 44,100 20,790 27,594 23,436 22,680 37,800 34,020 $ 482,580 $ 133,560 $ 190,134 $ 158,886