Superior Markets, Incorporated, operates three stores in a large metropolitan area. A segmented absorption costing income...

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Superior Markets, Incorporated, operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Superior Markets, Incorporated Income Statement For the Quarter Ended September 30 Total Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income (loss) North Store $ 3,300,000 1,822,920 $ 792,000 443,520 South Store $ 1,320,000 726,000 East Store $ 1,188,000 653,400 1,477,080 898,700 421,300 1,320,000 348,480 594,000 534,600 254,540 346,500 297,660 116,600 165,990 138,710 371,140 512,490 436,370 $ 157,080 $ (22,660) $ 81,510 $ 98,230 The North Store has consistently shown losses over the past two years, so management is considering closing this store. a. A detailed breakdown of the selling and administrative expenses shown above is as follows: Total North Store South Store East Store Selling expenses: Sales salaries Direct advertising General advertising* Store rent $ 262,900 205,700 49,500 $ 77,000 56,100 $ 97,900 79,200 $ 88,000 70,400 11,880 19,800 17,820 330,000 93,500 132,000 104,500 Depreciation of store fixtures Delivery salaries 17,600 5,060 6,600 5,940 23,100 7,700 7,700 7,700 Depreciation of delivery equipment Total selling expenses *Allocated on the basis of sales dollars. 9,900 3,300 3,300 3,300 $ 898,700 $ 254,540 $ 346,500 $ 297,660 Administrative expenses: Store managers' salaries General office salaries* Insurance on fixtures and inventory Utilities Employment taxes General office-other* Total administrative expenses *Allocated on the basis of sales dollars. Total North Store South Store East Store $ 77,000 55,000 $ 23,100 13,200 $ 33,000 $ 20,900 22,000 19,800 27,500 8,250 9,900 9,350 116,600 34,100 44,000 38,500 62,700 18,150 24,090 20,460 82,500 19,800 33,000 29,700 $ 421,300 $ 116,600 $ 165,990 $ 138,710 b. The North Store's rental agreement can be broken with no penalty. c. The North Store's fixtures would be transferred to the other two stores if it were closed. d. The North Store's general manager would be transferred to another position in the company if it were closed. She would fill a position that otherwise would have required hiring a new employee at a salary of $12 100 per quarter. The general manager of the Superior Markets, Incorporated, operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Superior Markets, Incorporated Income Statement For the Quarter Ended September 30 Total Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Total expenses Net operating income (loss) North Store $ 3,300,000 1,822,920 $ 792,000 443,520 South Store $ 1,320,000 726,000 East Store $ 1,188,000 653,400 1,477,080 898,700 421,300 1,320,000 348,480 594,000 534,600 254,540 346,500 297,660 116,600 165,990 138,710 371,140 512,490 436,370 $ 157,080 $ (22,660) $ 81,510 $ 98,230 The North Store has consistently shown losses over the past two years, so management is considering closing this store. a. A detailed breakdown of the selling and administrative expenses shown above is as follows: Total North Store South Store East Store Selling expenses: Sales salaries Direct advertising General advertising* Store rent $ 262,900 205,700 49,500 $ 77,000 56,100 $ 97,900 79,200 $ 88,000 70,400 11,880 19,800 17,820 330,000 93,500 132,000 104,500 Depreciation of store fixtures Delivery salaries 17,600 5,060 6,600 5,940 23,100 7,700 7,700 7,700 Depreciation of delivery equipment Total selling expenses *Allocated on the basis of sales dollars. 9,900 3,300 3,300 3,300 $ 898,700 $ 254,540 $ 346,500 $ 297,660 Administrative expenses: Store managers' salaries General office salaries* Insurance on fixtures and inventory Utilities Employment taxes General office-other* Total administrative expenses *Allocated on the basis of sales dollars. Total North Store South Store East Store $ 77,000 55,000 $ 23,100 13,200 $ 33,000 $ 20,900 22,000 19,800 27,500 8,250 9,900 9,350 116,600 34,100 44,000 38,500 62,700 18,150 24,090 20,460 82,500 19,800 33,000 29,700 $ 421,300 $ 116,600 $ 165,990 $ 138,710 b. The North Store's rental agreement can be broken with no penalty. c. The North Store's fixtures would be transferred to the other two stores if it were closed. d. The North Store's general manager would be transferred to another position in the company if it were closed. She would fill a position that otherwise would have required hiring a new employee at a salary of $12 100 per quarter. The general manager of the

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