Requirement $1.$ By closing down the Rhode Island$$ store,

PerezPerez

can reduce overall corporate overhead costs by

$ $42$ comma $000$$$42,000.$

Calculate

PerezPerez$\text{'}$s

operating income if it closes the Rhode Island store. Is Maria$$ Lopez's statement about the effect of closing the Rhode Island store$$ correct? Explain.

Before calculating the operating income if

PerezPerez

closes the Rhode Island$$ store, let's determine if each revenue or cost account is relevant to this analysis.$$ Remember, in order to be relevant the amount must occur in the future and differ among the alternative courses of action. In this case those alternative actions are $1.$ keeping the store open and $2.$ closing the store. $($Select an answer for each$$ account.$)$