$17-35$ Closing and opening stores. $($LO $5)$ Your Market $($YM$)$ runs two

convenience stores, one in Vancouver and one in Surrey. Operating income for

each store in the year follows:

The equipment has a remaining useful life of one year and zero disposal price.

In a senior management meeting, Maria Lopez, the management accountant at

Your Market, makes the following comment: $"$YM can increase its profitability

by closing down the Surrey store or by adding more stores like it$."$

Required

Answer the following questions referring to the preceding data.

Calculate YM$\text{'}$s operating income if it closes down the Surrey store. By

closing down the store, YM can reduce overall corporate overhead costs

by $$44,000.$ Is Maria Lopez correct? Explain.

Calculate YM$\text{'}$s operating income if it opens another store with revenues

and costs identical to the Surrey store $($including a cost of $$22,000$ to

acquire equipment with a one$-$year useful life and zero disposal price$).$

Opening this store will increase corporate overhead costs by $$4,000.$ Is

Maria Lopez correct? Explain.