Additional computations " These costs would be saved if the store were closed. b The rent would be saved if the store were closed. Assessed annually on the basis of average inventory on hand each month. d 8.5% ofcost of depart ental equipment. The equipment has no salvage value and Power Music would incur no costs in scrapping it. Alocated on the basis of store sales as a fraction of total company sales. Management estimates that 5% of these costs allocated to the Fifth Avenue store could be saved if the store were closed. Based on average inventory quantity multiplied by the company's borrowing rate for three-month loans. Analysis of these results has led management to consider closing the Fifth Avenue store. Members of the management team agree that keeping the Fifth Ave store open is not essential to maintaining good customer relations and supporting the rest of the company's business. In other words, eliminating the Fifth Ave store is not expected to affect the amount of business done by the other stores. Required a. Calculate the cost savings in closing the Fifth Avenue store. Cost saving b. Should the Fifth Avenue store be closed? Yes No