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: Superior Markets, Incorporated Income Statement For the Quarter Ended September 30 Total Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income (loss) North Store $ 3,120,000 1,723,488 $ 748,800 South Store $ 1,248,000 East Store $ 1,123,200 419,328 686,400 617,760 1,396,512 329,472 561,600 505,440 849,680 240,656 327,600 281,424 398,320 110,240 156,936 131,144 1,248,000 350,896 484,536 412,568 $ 148,512 $ (21,424) $ 77,064 $ 92,872 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: 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. Total North Store South Store East Store $ 248,560 194,480 46,800 $ 72,800 53,040 $ 92,560 74,880 $ 83,200 66,560 11,232 18,720 16,848 312,000 88,400 124,800 98,800 16,640 4,784 6,240 5,616 21,840 7,280 7,280 7,280 9,360 3,120 3,120 3,120 $ 849,680 $ 240,656 $ 327,600 $ 281,424 Total North Store South Store East Store $ 72,800 52,000 26,000 $ 21,840 12,480 7,800 $ 31,200 20,800 $ 19,760 18,720 9,360 8,840 110,240 32,240 41,600 36,400 59,280 17,160 22,776 19,344 78,000 18,720 31,200 28,080 $ 398,320 $ 110,240 $ 156,936 $ 131,144