Question No Two :

The most recent annual income statement for Super Stores is given below: ( in 1000 L.E.)

Sales.............................	Total 1,500	Store A 400	Store B 600	Store C 500
Variable expenses.......	880	160	420	300
Contribution margin .	620	240	180	200
Special fixed expenses	450	100	200	150
Store segment margin	170	140	(20)	50
Common fixed expenses	110	20	30	60
Net operating income.	60	120	( 50)	(10)

In order to select the best plan for the next year the board of directors are discussing the following plans:

Plan ( A ) :To delete the store which showed a net loss last year without any new stores and without increasing sales of other remaining stores.

Plan ( B ) : Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one-fourth of its special fixed expenses will continue unchanged(Unavoidable). Assume that closing Store B has no effect on the sales of other stores.

Plan ( C ) : Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one-fourth of its

special fixed expenses will continue unchanged(Unavoidable). The studies also show that closing Store B would result in a 10 percent decrease in sales in Store A.

Plan ( D ) : Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one-fourth of its special fixed expenses will continue unchanged (Unavoidable). Assume that closing store ( B ) will lead to an increase of sales of store ( C ) by

20 % , without increasing any fixed costs.

Required: Prepare the expected income statement under each plan, comment briefly on any decision rules involved therein.