Superlor Markets, Inc., operates three stores In a large metropolitan area. A segmented absorption costing Income statement for the company for the last quarter Is glven below Income Statement For the Quarter Ended Septenber 38 Store $4,100 , 2,255,888 $868 , $1,648 , $1,600 ,eee Cost of goods sold Selling and administrative expenses 839,808 438,888 242,488 117,888 320,508 276, 188 153,688 Adninistrative expenses Total expenses Net operating income (loss) $ 568,808 $(14,408) 292,108 298,388 The North Store has consistently shown losses over the past two years. For this reason, management Is glving conslderation 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 avallable for your use: a. The breakdown of the selling and administrative expenses that are shown above Is as follows: North Store Store Store Selling expenses Sales salaries $263,48e 69,680 88,608 $113,280 83,880 24,686 Direct advertising Store rent Delivery salaries 62,886 12,986 88,888 113,880 24,886 87,800 288,886 24,386 Depreciation of delivery $839,880 $242,480 $328,580 $276,190 Total selling expenses Allocated on the basis of sales dollars. Store Store Store Adninistrative expenses Store managers salaries General office salaries Insurance on fixtures and inventory Utilities 36,886 18,880 14,588 65,355 182,586 25,455 General office-other $438,880 $117,880 $167,480 $153,688 Total administrative expenses Allocated on the basis of sales dollars. b. The lease on the bullding housing the North Store can be broken with no penalty. C. The fixtures belng 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 retalned and transferred to another posltion In the company If the North Store were closed. She would be filllng a posltilon that would otherwise be filled by hiring a new employee at a salary of $12,000 per quarter. The general manager of the North Store would continue to earn her normal salary of $13,000 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. Thls person's salary is $5,100 per quarter. The dellvery 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' salaries. g. One-third of the Insurance In the North Store Is on the store's fixtures h. The "General office salarles and "General office-other" relate to the overall management of Superlor Markets, Inc. If the North Store were closed, one person In the general office could be discharged because of the decrease In overall workload. Thls persons compensation is $6,500 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 Store? present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3Required 4 Required 5 How much employee salaries will the company avoid if it closes the North Store? Employee salaries Required 1 Required 2 > Complete this question by entering your answers in the tabs below Required 1Required 2Required 3 Required 4Required 5 How much employment taxes will the company avoid if it closes the North Store? ployment taxes Required 1 Required 3> Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3Required 4 Required 5 What is the financial advantage (disadvantage) of closing the North Store? (Enter any "disadvantages" as a negative value.) Financial advantage (disadvantage) Required 2 Required4 > Complete this question by entering your answers in the tabs below Required 1 Required 2Required 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) Required 4 Required5 Superlor Markets, Inc., operates three stores In a large metropolitan area. A segmented absorption costing Income statement for the company for the last quarter Is glven below Income Statement For the Quarter Ended Septenber 38 Store $4,100 , 2,255,888 $868 , $1,648 , $1,600 ,eee Cost of goods sold Selling and administrative expenses 839,808 438,888 242,488 117,888 320,508 276, 188 153,688 Adninistrative expenses Total expenses Net operating income (loss) $ 568,808 $(14,408) 292,108 298,388 The North Store has consistently shown losses over the past two years. For this reason, management Is glving conslderation 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 avallable for your use: a. The breakdown of the selling and administrative expenses that are shown above Is as follows: North Store Store Store Selling expenses Sales salaries $263,48e 69,680 88,608 $113,280 83,880 24,686 Direct advertising Store rent Delivery salaries 62,886 12,986 88,888 113,880 24,886 87,800 288,886 24,386 Depreciation of delivery $839,880 $242,480 $328,580 $276,190 Total selling expenses Allocated on the basis of sales dollars. Store Store Store Adninistrative expenses Store managers salaries General office salaries Insurance on fixtures and inventory Utilities 36,886 18,880 14,588 65,355 182,586 25,455 General office-other $438,880 $117,880 $167,480 $153,688 Total administrative expenses Allocated on the basis of sales dollars. b. The lease on the bullding housing the North Store can be broken with no penalty. C. The fixtures belng 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 retalned and transferred to another posltion In the company If the North Store were closed. She would be filllng a posltilon that would otherwise be filled by hiring a new employee at a salary of $12,000 per quarter. The general manager of the North Store would continue to earn her normal salary of $13,000 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. Thls person's salary is $5,100 per quarter. The dellvery 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' salaries. g. One-third of the Insurance In the North Store Is on the store's fixtures h. The "General office salarles and "General office-other" relate to the overall management of Superlor Markets, Inc. If the North Store were closed, one person In the general office could be discharged because of the decrease In overall workload. Thls persons compensation is $6,500 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 Store? present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3Required 4 Required 5 How much employee salaries will the company avoid if it closes the North Store? Employee salaries Required 1 Required 2 > Complete this question by entering your answers in the tabs below Required 1Required 2Required 3 Required 4Required 5 How much employment taxes will the company avoid if it closes the North Store? ployment taxes Required 1 Required 3> Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3Required 4 Required 5 What is the financial advantage (disadvantage) of closing the North Store? (Enter any "disadvantages" as a negative value.) Financial advantage (disadvantage) Required 2 Required4 > Complete this question by entering your answers in the tabs below Required 1 Required 2Required 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) Required 4 Required5