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
	Total			North Store			South Store			East Store
Sales	$	3,660,000		$	878,400		$	1,464,000		$	1,317,600
Cost of goods sold		2,021,784			491,904			805,200			724,680
Gross margin		1,638,216			386,496			658,800			592,920
Selling and administrative expenses:
Selling expenses		996,740			282,308			384,300			330,132
Administrative expenses		467,260			129,320			184,098			153,842
Total expenses		1,464,000			411,628			568,398			483,974
Net operating income (loss)	$	174,216		$	(25,132	)	$	90,402		$	108,946

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:

1. The breakdown of the selling and administrative expenses that are shown above is as follows:

	Total		North Store		South Store		East Store
Selling expenses:
Sales salaries	$	291,580	$	85,400	$	108,580	$	97,600
Direct advertising		228,140		62,220		87,840		78,080
General advertising*		54,900		13,176		21,960		19,764
Store rent		366,000		103,700		146,400		115,900
Depreciation of store fixtures		19,520		5,612		7,320		6,588
Delivery salaries		25,620		8,540		8,540		8,540
Depreciation of delivery equipment		10,980		3,660		3,660		3,660
Total selling expenses	$	996,740	$	282,308	$	384,300	$	330,132

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store managers' salaries	$	85,400	$	25,620	$	36,600	$	23,180
General office salaries*		61,000		14,640		24,400		21,960
Insurance on fixtures and inventory		30,500		9,150		10,980		10,370
Utilities		129,320		37,820		48,800		42,700
Employment taxes		69,540		20,130		26,718		22,692
General officeother*		91,500		21,960		36,600		32,940
Total administrative expenses	$	467,260	$	129,320	$	184,098	$	153,842

*Allocated on the basis of sales dollars.

1. The lease on the building housing the North Store can be broken with no penalty.

2. The fixtures being used in the North Store would be transferred to the other two stores if the North Store were closed.

3. The general manager of the North Store would be retained and transferred to another position in the company if the North Store were closed. She would be filling a position that would otherwise be filled by hiring a new employee at a salary of $13,420 per quarter. The general manager of the North Store would continue to earn her normal salary of $14,640 per quarter. All other managers and employees in the North store would be discharged.

4. The company has one delivery crew that serves all three stores. One delivery person could be discharged if the North Store were closed. This persons salary is $4,880 per quarter. The delivery equipment would be distributed to the other stores. The equipment does not wear out through use, but does eventually become obsolete.

5. The company pays employment taxes equal to 15% of their employees' salaries.

6. One-third of the insurance in the North Store is on the stores fixtures.

7. The General office salaries and General officeother relate to the overall management of Superior Markets, Inc. If the North Store were closed, one person in the general office could be discharged because of the decrease in overall workload. This persons compensation is $7,320 per quarter.

Required:

1. How much employee salaries will the company avoid if it closes the North Store?

2. How much employment taxes will the company avoid if it closes the North Store?

3. What is the financial advantage (disadvantage) of closing the North Store?

4. Assuming that the North Store's floor space cant be subleased, would you recommend closing the North Store?

5. Assume that the North Store's floor space cant be subleased. However, let's introduce three more assumptions. First, assume that if the North Store were closed, one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. Second, assume that the East Store has enough capacity to handle the increased sales that would arise from closing the North Store. Third, assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in the East store. Given these new assumptions, what is the financial advantage (disadvantage) of closing the North Store?