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Problem 12-26 Close or Retain a Store [L012-2] Superior Markets, Inc., operates three stores in a large metropolitan area. Asegmented absorption costing income statement for the company for the last quarter is given below: Superior Markets, Inc Income Statement For the Quarter Ended September 30 North South East Total Store Store Store Sales $3,700,000 $800,000 $1,480,000 $1,420,000 2,035,000 460,000 Cost of goods sold 781,000 794,000 686,000 639,000 Gross margin 1,665,000 340,000 Selling and administrative expenses Selling expenses: 831,000 238,400 318,500 274,100 418,000 113,000 161,400 143,600 Administrative expenses Total expenses 1,249,000 351,400 479,900 417,700 416,000 (11,400) 206,100 221,300 Net operating income (loss) The North Store has consistently shown losses over the past two years. For this reason, management is giving consideration to closing the store. The company has asked you to make a recommendation as to whether the store should be closed or kept open. The following additional information is available for your use: a. The breakdown of the selling and administrative expenses is as follows