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:

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:

$*$Allocated on the basis of sales dollars.

$*$Allocated on the basis of sales dollars. Required:

How much employee salaries will the company avoid if it closes the North Store?

How much employment taxes will the company avoid if it closes the North Store?

What is the financial advantage $($disadvantage$)$ of closing the North Store?

Assuming that the North Store's floor space can't be subleased, would you recommend closing the North Store?

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? Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

What is the financial advantage $($disadvantage$)$ of closing the North Store? $($Enter any "disadvantages" as a negative value.$)$Required $1$

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.$)$