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Supetior Markets, Incorporated, operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is
Supetior 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 avallable for your use a. The breakdown of the selling and administrative expenses that are shown above is as follows 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 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 $13,640 per quartet. The general manager of the North Store would continue to earn her normal salary of $14,880 per quarter. All other manogers 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. This person's salary is $4,960 pet quarter. The delivery equipment would be distributed to the other stores The equipment does not wear out through use, but does eventually become obsolete. 1. The company pays employment taxes equal to 15% of their employees' salaries 9 One-thitd of the insurance in the North Store is on the store's fixtures h. The "Generaf olfice salaries" and "General office-other' relate to the overall management of Supenor Markets, Incorporated If the North Stote were closed, one person itt the general office could be discharged because of the decrease in overall workload This person's compensation is $7,440 per quanter. Required: 1 How much employee solonies will the company avoid if it closes the North Store? 2. How much employment taxes will the company avoid if it closes the North Stare? 3. What is the financial advantage (disodvantage) of closing the North Store? 4 Assuming that the Noith Store's floor space cant be subleased, woutd 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 Supenior Markets Second. assume that the East Store has enoinah cabocity to handle the increased sales that would atise from closina 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 $7,440 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 spoce can't be subleased, would you recommend closing the Nonth 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 handie 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 Nonth Stare? Complete this question by entering your answers in the tabs below. How much employee salaries will the company avoid if it doses the North Store? 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 $7,440 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. How much employment taxes will the company avoid if it closes the North Store? 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 $7.440 per quarter Required: 1. How thuchemployee salartes will the compary avoid if it closes the North Store? 2. How much cmployment taxes. Will the compony avoid if it closes the North Store? 3. What is the financial odvantage (disodvantage) of clostng the North Store? 4. Assuming that the North Storn's floor space can't be subleased, would you tecominend closing the North Store? 5 Assume that the North Store's floot space can't be subleased However, let's introduce three mote assumptions First, assume that if the North Store were closed, one.fourth of its sales would transfer to the East Store, due to strong custorner loyalty to Superior Matkets: Second, assume that the East Store has enough capacity to handle the increased sales that would anse from closing the North Store. Thifd assiame thot the incieased sales in the East Store would yield the sarre gross margtn as a percentage of sales as piesent 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. North Store were closed, one person in the general office could be discharged because of the decrease in overali workload This person's compensation is $7,440 per quorter Required: 1. How much employee salaties will the company avoid if it closes the North Store? 2. How much employment taxes will the company avold if it closes the North Store? What is the financial advantage (disadvantage) of closing the North Store? 4 Assuming that the North Store's floor space con't be subleased, would you recommend closing the North Store? 5 Assume that the North Store's floor spoce 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 loyolty to Superior Markets. Second, assume that the Enst Store has enough capacity to handle the increased sales that would anse from closting the North Store. Third, assume that the increased seles in the East Store would yeld the same gross margin as a percentoge of sales as present sales in the East store Given these new nssumptions, what is the financial advantage (disadvantage) of closing the North Store? Complete this question by entering your answers in the tabs below. Assuine that the North Store's floor stace cant be subleased. However, let's introduce three more assumptions. First, assurne that If the North Store were dosed, one-fourth of its sales would transer to the East Store, due to strong customer loyalty to Superior Matrets. Sncond, msume that the East Store has enough cipadty to handle the lincreosed sales that would artise from closing the fioith store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of soles is preseat sibles in the East store. Given these new assumptions, what is the finandial afvantage (disadvantage) of dosing the North Storet (Enter any "disadvaitages" its a negntivi valued)
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