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A single delivery crew serves all three stores. One delivery person could be discharged if the Romulan Store were closed; this person's salary amounts to $$7,000$ per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but it does eventually become obsolete.

f$.$

One$-$third of the Romulan Store's insurance relates to its fixtures.

g$.$

The general office salaries and other expenses relate to the general management of Star Trek Corporation. The employee in the general office who is responsible for the Romulan Store would be discharged if the store were closed. The employee's compensation amounts to $$8,000$ per quarter.

Required:

$1.$

Prepare a schedule showing the change in revenues and expenses and the impact on the overall company operating income that would result if the Romulan Store were closed.

$2.$

Based on your computations in $(1)$ above, what would you recommend to the management of Star Trek Corporation?

$3.$

Assume that if the Romulan Store were closed, sales in the Borg Store would increase by $$200,000$ per quarter due to loyal customers shifting their buying to the Borg Store. The Borg Store has ample capacity to handle the increased sales, and its gross margin is $43\%$ of sales. What effect would these factors have on your recommendation concerning the Romulan Store? Show computations.

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