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 $ 3,848,880 $ 921,600 2,121,216 516, e96 1,718,784 485,584 South Store $ 1,536, eee 844,820 691,200 East Store $ 1,382,480 760,320 622,888 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income (loss) 1,845,760 499,240 1,536,000 $ 182,784 296, 192 135,689 431,872 $ (26,368) 403, 200 193, 152 596,352 $ 94,848 346,368 161,488 507.776 $ 114,384 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. $ 305,920 239,360 57,600 384, eee 20,480 26,888 11,528 $ 1,845,760 $ 89,600 65,280 13,824 188,888 5,888 8,960 3,840 $ 296, 192 $ 113,92 92,160 23,840 153,68 7,689 8,960 3,840 $ 483, 280 $ 102,482 81,92 20,736 121,600 6,912 8,960 3,840 $ 346,368 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 "Allocated on the basis of sales dollars. $ 89,600 64.ee 32,600 135, 688 72,960 96,eee $ 490,248 $ 26,888 15,368 9,680 39,688 21,120 23,040 $ 135, 680 $ 38,482 25,600 11,520 51,282 28,832 38,480 $ 193, 152 $ 24,320 23,840 10,880 44,880 23,888 34,560 $ 161,488 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 $14.080 per quarter. The general manager of the North Store would continue to earn her normal salary of $15,360 per quarter. All other managers and employees in the North store would be discharged. e. The company has one dellvery crew that serves all three stores. One dellvery person could be discharged if the North Store were closed. This person's salary is $5.120 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 on the store's fixtures. h. 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 person's compensation is $7.680 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 avoid 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 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)