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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

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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: The breakdown of the selling and administrative expenses that are shown above is as follows: b. The lease on the bulding 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 transterred to another position in the company if the North Store were closed, She would be filing a position that would otherwise be filled by hiring a new employee at a salary of $14,520 per quarter. The general manager of the North Store would continue to eam her normal salary of $15,840 per quarter All other managers and employees in the North store would be discharged d. 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 $14,520 per quartec. The general manager of the North Store would continue to eam her nommal salary of $15,840 per quarter. All other managers and employees in the Nonth 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 $5.280 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 t. The company pays employment taxes equal to 15% of their employees' salarles. 9. One-thitd 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 workioad. This person's compensation is $7,920 per quarter. Required: 1. How much employee salaries will the company avold if it closes the North Store? 2. How much employment taxes wal 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 Stores floor space can't be subleased, would you recommend closing the North Store? 5. Assume that the North Stores floor space can't be subleased. However, let's introduce three more assumptions. Fitst, assume that if. the Noith Store were dosed, one fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets Second, assurne that the East Store has enough capacity to lhandle the increased sales that would atise from closing the Noith Store. Third, assume thot 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 financiat odvantage (disadvantage) of closing the North Store

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