Question & Answer: Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing…..

Superior Markets, Inc., 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, Inc. Income Statement For the Quarter Ended September 30 North ou Store $4,000,000 $840,000 $1,600,000 $1,560,000 858,000 Total Store Sales Cost of goods sold 2,200,000 495,000 847,000 Gross margin 1,800,000 345,000 753,000 702,000 Selling and administrative expenses Selling expenses Administrative expenses 837,000 241.400 433,000 116,000 320,000 165,900 275,600 151,100 Total expenses 1,270,000 357,400 485,900 426,700 Net operating income (loss) S 530,000 (12,400) 267,100 275,300 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 0 ou as Total Store Store Store Selling expenses Sales salaries Direct advertising General advertising Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment $235,000 $ 55,200 $ 83,000 $ 96,800 32,000 23,400 175,000 60,000 310,000 21,000 24,000 12,000 82,000 24,000 95,000 112,000 103,000 7,000 8,000 4,000 61,000 12,600 5,600 8,000 4,000 8,400 8,000 4,000 Total selling expenses $ 837,000 $241,400 $320,000 $275,600 Allocated on the basis of sales dollars North Store ou as Total Store Store Administrative expenses Store management salaries General office salaries* $85,000 $ 26,000 $ 35,000 $ 24,000 23,400 60,000 12,600 24,000