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 North Store South Store East Store Sales $ 3,660,000 $ 878,460 $ 1,464, eee $ 1,317,600 Cost of goods sold 2,621,784 491,984 805,200 724,682 Gross margin 1,638,216 386,496 658,888 592,920 Selling and administrative expenses: Selling expenses 996,740 282,388 384,300 338,132 Administrative expenses 467,260 129,320 184, e98 153,842 Total expenses 1,464,800 411,628 568, 398 483,974 Net operating income (loss) $ 174,216 $ (25,132) $ 90,482 $ 108,946 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: Total North Store South Store East Store 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. $ 291,580 228,140 54,900 366,880 19,520 25,620 10,980 $ 996,740 $ 85,400 62,220 13,176 103, 7ee 5,612 8,540 3,660 $ 282,388 $ 188,580 87,840 21,960 146,480 7,320 8,540 3,660 $ 384,380 $ 97,600 78,888 19,764 115,980 6,5BB 8,540 3,662 $ 330,132 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 $ 85,480 61,888 30,500 129,320 69,548 91,500 $ 467,260 $ 25,620 14,640 9,150 37.82e 20,130 21,960 $ 129,320 $ 36,600 24,400 10,980 48,800 26,718 36,6ee $ 184,098 $ 23, 180 21,960 18,370 42,700 22,692 32,948 $ 153,842 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 of 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 $13.420 per quarter. The general manager of the North Store would continue to earn her normal salary of $14.640 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 $4.880 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. f. The company pays employment taxes equal to 15% of their employees' salarles. 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 57.320 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 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 1 Required 2 Required 3 Required 4 Required 5 How much employment taxes will the company avoid if it closes the North Store? Employment taxes Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 What is the financial advantage (disadvantage) of closing the North Store? (Enter any disadvantages" as a negative value.) Financial advantage (disadvantage) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store? The North Store should be closed. The North Store should not be closed 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 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? (Enter any "disadvantages" as a negative value.) Show less Financial advantage (disadvantage)