The following information is related to A&P Supermarket Pharmacy 100,000 60,000 90,000 (50,000) Bakery 50,000 20,000 10,000 20,000 Grocery 400,000 200,000 100,000 100,000 Total 550,000 280,000 200,000 70,000 Sales Revenues Variable Costs Fixed Costs Operating Income The pharmacy is generating losses for the last four years. The manager is considering closing down the pharmacy. If the pharmacy is closed, the pharmacist will be laid off. His salary i $60,000/period. The space of the pharmacy will be used to expand the bakery, which is expected to double their Sales Revenues. 1S Required: 1. Shoud A&P closes down the pharmacy? 2. What is the net effect on the annual profit