Contribution margin Traceable fixed costs: controllable Performance margin Traceable fixed costs: committed Store responsibility margin $ 1,800,000 1,080,000 $ 720,000 432,000 Shown as follows is a segmented income statement for Drexel-Hall during the current month: Sales Variable costs Profit Centers Store 2 Dollars $ 600,000 Drexel-Hall Dollars % Store 1 Dollars % % Store 3 Dollars % 100% 60 40% 24 $ 288,000 16% $ 600,000 372,000 $ 228,000 120,000 $ 108,000 100% 100% $ 600,000 100% 62 38% 20 378,000 $ 222,000 102,000 63 330,000 55 37% $ 270,000 45% 17 210,000 35 18% $ 120,000 20% $ 60,000 10% 180,000 10 Common fixed costs Income from operations $ 108,000 36,000 $ 72,000 6% 48,000 $ 60,000 8 66,000 11 66,000 11 10% $ 54,000 9% $ (6,000) (1)% 2 4% All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores. 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 $42,000, and sales at Store 2 to increase by $119,000. Closing Store 3 is not expected to cause any change in common fixed costs. Required: 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 from operations.