Top management of Drexel-Hall is considering closing Store 3. The three stores are close enough together that management estimates closing Store 3 would cause sales at Store 1 to increase by $60,000, and sales at Store 2 to increase by $120,000. Closing Store 3 is not expected to cause any change in common fixed costs.
Compute the increase or decrease that closing Store 3 should cause in:
a. Total monthly sales for Drexel-Hall stores.
b. The monthly responsibility margin of Stores 1 and 2.
c. The company€™s monthly income fromoperations.

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Profit Centers Drexel-Hall Store 1 Store 2 Store 3 Dollars % Dollars Dollars % Dollars % Sales. Variable costs. ···· Contribution margin . Traceable fixed costs: controllable.. Performance margin $288,000 Traceable fixed costs: committed Store responsibility margin S 108,000 Common fixed costs Income from operations $ 72,000 1,080,000 60 $720,000 40% $228,000 38% $222,000 37% $270,000 45% 372,000 62 378,000 63 330,000 55 432,000 24 120,000 20 102,000 17 $120,000 210,000 35 16% $108,000 48,000 6% $60,000 18% 20% $60,000 66,000 (6,000) 10% 11 (1)% 180,000 10 66,000 1 10% $54,000 9% $ 36,000 2 4%