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	$ 3,060,000	$ 734,400	$ 1,224,000	$ 1,101,600
Cost of goods sold	1,690,344	411,264	673,200	605,880
Gross margin	1,369,656	323,136	550,800	495,720
Selling and administrative expenses:
Selling expenses	833,340	236,028	321,300	276,012
Administrative expenses	390,660	108,120	153,918	128,622
Total expenses	1,224,000	344,148	475,218	404,634
Net operating income (loss)	$ 145,656	$ (21,012)	$ 75,582	$ 91,086

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:

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	$ 243,780	$ 71,400	$ 90,780	$ 81,600
Direct advertising	190,740	52,020	73,440	65,280
General advertising*	45,900	11,016	18,360	16,524
Store rent	306,000	86,700	122,400	96,900
Depreciation of store fixtures	16,320	4,692	6,120	5,508
Delivery salaries	21,420	7,140	7,140	7,140
Depreciation of delivery equipment	9,180	3,060	3,060	3,060
Total selling expenses	$ 833,340	$ 236,028	$ 321,300	$ 276,012

*Allocated on the basis of sales dollars.

	Total	North Store	South Store	East Store
Administrative expenses:
Store managers' salaries	$ 71,400	$ 21,420	$ 30,600	$ 19,380
General office salaries*	51,000	12,240	20,400	18,360
Insurance on fixtures and inventory	25,500	7,650	9,180	8,670
Utilities	108,120	31,620	40,800	35,700
Employment taxes	58,140	16,830	22,338	18,972
General officeother*	76,500	18,360	30,600	27,540
Total administrative expenses	$ 390,660	$ 108,120	$ 153,918	$ 128,622

*Allocated on the basis of sales dollars.

The lease on the building housing the North Store can be broken with no penalty.

The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.

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 $11,220 per quarter. The general manager of the North Store would continue to earn her normal salary of $12,240 per quarter. All other managers and employees in the North store would be discharged.

The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This persons salary is $4,080 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.

The company pays employment taxes equal to 15% of their employees' salaries.

One-third of the insurance in the North Store is on the stores fixtures.

The General office salaries and General officeother 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 persons compensation is $6,120 per quarter.

Required:

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

5. Assume that the North Store's floor space cant 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?

NEED ONLY #3 and #5 please