Thrifty Markets, Inc., operates three stores in a large metropolitan area. The companys segmented absorption costing income statement for the last quarter is given below:

Thrifty Markets, Inc. Income Statement For the Quarter Ended March 31
	Total	Uptown Store	Downtown Store	Westpark Store
Sales	$	2,500,000		$	900,000		$	600,000		$	1,000,000
Cost of goods sold		1,403,000			477,000			360,000			566,000
Gross margin		1,097,000			423,000			240,000			434,000
Selling and administrative expenses:
Selling expenses:
Direct advertising		120,000			37,000			40,000			43,000
General advertising*		13,000			4,680			3,120			5,200
Sales salaries		149,000			47,000			42,000			60,000
Delivery salaries		39,000			13,000			13,000			13,000
Store rent		203,000			68,000			62,000			73,000
Depreciation of store fixtures		46,860			18,200			8,800			19,860
Depreciation of delivery equipment		18,000			6,000			6,000			6,000
Total selling expenses		588,860			193,880			174,920			220,060
Administrative expenses:
Store management salaries		73,000			22,000			24,000			27,000
General office salaries*		48,000			17,280			11,520			19,200
Utilities		96,600			32,000			32,000			32,600
Insurance on fixtures and inventory		24,300			7,600			8,600			8,100
Employment taxes		38,400			11,900			12,700			13,800
General office expensesother*		25,000			9,000			6,000			10,000
Total administrative expenses		305,300			99,780			94,820			110,700
Total operating expenses		894,160			293,660			269,740			330,760
Net operating income (loss)	$	202,840		$	129,340		$	(29,740	)	$	103,240

*Allocated on the basis of sales dollars.

Management is very concerned about the Downtown Stores inability to show a profit, and consideration is being given to closing the store. The company has asked you to make a recommendation as to what course of action should be taken. The following additional information is available about the store:

a.	The manager of the store has been with the company for many years; he would be retained and transferred to another position in the company if the store were closed. His salary is $8,000 per month, or $24,000 per quarter. If the store were not closed, a new employee would be hired to fill the other position at a salary of $7,000 per month.
b.	The lease on the building housing the Downtown Store can be broken with no penalty.
c.	The fixtures being used in the Downtown Store would be transferred to the other two stores if the Downtown Store were closed.
d.	The companys employment taxes are 11% of salaries.
e.	A single delivery crew serves all three stores. One delivery person could be discharged if the Downtown Store were closed; this persons salary amounts to $9,500 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but it does eventually become obsolete.
f.	One-third of the Downtown Stores insurance relates to its fixtures.
g.	The general office salaries and other expenses relate to the general management of Thrifty Markets, Inc. The employee in the general office who is responsible for the Downtown Store would be discharged if the store were closed. This employees compensation amounts to $8,000 per quarter.

Required:
1.	Prepare a schedule showing the change in revenues and expenses and the impact on the overall company net operating income that would result if the Downtown Store were closed.(Input all amounts as positive values. Round yourintermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

(Click to select)Gross margin gained if the store is closedGross margin lost if the store is closed		$
Less costs that can be avoided:
(Click to select)Insurance on inventoriesEmployment taxesGeneral advertisingStore rentStore management salariesGeneral office expenses-otherGeneral office salariesDelivery salariesSales salariesDirect advertisingUtilities	$
(Click to select)General office expenses-otherEmployment taxesSales salariesInsurance on inventoriesDelivery salariesUtilitiesGeneral office salariesDirect advertisingStore management salariesGeneral advertisingStore rent
(Click to select)UtilitiesGeneral office expenses-otherGeneral advertisingGeneral office salariesEmployment taxesDelivery salariesDirect advertisingSales salariesInsurance on inventoriesStore rentStore management salaries
(Click to select)General office expenses-otherStore rentSales salariesInsurance on inventoriesDirect advertisingGeneral office salariesStore management salariesGeneral advertisingEmployment taxesDelivery salariesUtilities
(Click to select)Store rentSales salariesUtilitiesGeneral office salariesStore management salariesEmployment taxesDelivery salariesInsurance on inventoriesGeneral office expenses-otherDirect advertisingGeneral advertising
(Click to select)Employment taxesSales salariesGeneral advertisingDelivery salariesUtilitiesStore rentGeneral office expenses-otherStore management salariesDirect advertisingInsurance on inventoriesGeneral office salaries
(Click to select)General office expenses-otherDirect advertisingSales salariesGeneral advertisingUtilitiesGeneral office salariesStore management salariesStore rentEmployment taxesInsurance on inventoriesDelivery salaries
(Click to select)Store rentGeneral advertisingGeneral office salariesSales salariesInsurance on inventoriesDelivery salariesUtilitiesDirect advertisingStore management salariesEmployment taxesGeneral office expenses-other
(Click to select)Store management salariesDelivery salariesStore rentGeneral advertisingGeneral office expenses-otherGeneral office salariesInsurance on inventoriesDirect advertisingEmployment taxesUtilitiesSales salaries
(Click to select)Decrease in company net operating incomeIncrease in company net operating income		$

2.	Based on your computations in (1) above, what recommendation would you make to the management of Thrifty Markets, Inc.?
	The Downtown Store should be closed. The Downtown Store should not be closed.

3.	Assume that if the Downtown Store were closed, sales in the Uptown Store would increase by $400,000 per quarter due to loyal customers shifting their buying to the Uptown Store. The Uptown Store has ample capacity to handle the increased sales, and its gross margin is 47% of sales.

a.	Calculate the Net advantage of closing the Downtown Store.(Negative amount should be indicated with a minus sign. Round yourintermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Net advantage of closing the Downtown Store

$

b.	What recommendation would you make to the management of Thrifty Markets, Inc.?
	The Downtown Store should not be closed. The Downtown Store should be closed.