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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	$	3,900,000		$	1,020,000		$	1,500,000		$	1,380,000
Cost of goods sold		2,155,200			571,200			825,000			759,000
Gross margin		1,744,800			448,800			675,000			621,000
Selling and administrative expenses:
Selling expenses:		1,103,500			327,400			409,500			366,600
Administrative expenses		574,200			166,660			216,400			191,140
Total expenses		1,677,700			494,060			625,900			557,740
Net operating income (loss)	$	67,100		$	(45,260	)	$	49,100		$	63,260

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:

	Total		North Store		South Store		East Store
Selling expenses:
Sales salaries	$	329,000	$	100,000	$	119,000	$	110,000
Direct advertising		232,000		66,000		87,000		79,000
General advertising*		58,500		15,300		22,500		20,700
Store rent		345,000		100,000		135,000		110,000
Depreciation of store fixtures		41,500		13,600		13,500		14,400
Delivery salaries		66,000		22,000		22,000		22,000
Depreciation of delivery equipment		31,500		10,500		10,500		10,500
Total selling expenses	$	1,103,500	$	327,400	$	409,500	$	366,600

*Allocated on the basis of sales dollars.

	Total		North Store		South Store		East Store
Administrative expenses:
Store management salaries	$	115,000	$	36,000	$	45,000	$	34,000
General office salaries*		78,000		20,400		30,000		27,600
Insurance on fixtures and inventory		44,500		12,000		16,500		16,000
Utilities		151,000		46,000		55,000		50,000
Employment taxes		88,200		26,760		32,400		29,040
General office other*		97,500		25,500		37,500		34,500
Total administrative expenses	$	574,200	$	166,660	$	216,400	$	191,140

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 South East North Store $3,900,000 $1,020,000 $1,500,000 $1,380,000 759,000 Cost of goods sold Gross margin Selling and administrative expenses: 2,155,200 571,200 825,000 1744,800 4 448,800 675,000 621,000 Selling expenses: 1,103,500 574,200 327,400 166,660 409,500 216,400 366,600 191.140 Total expenses 1 ,6 77,700 494,00 625 625,900 557,740 Net operating income (loss) $ 67,100 (45,260) 49,100 63,260 The North Store has consistently shown losses over the past two years. For this reason, management s 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 n is available for your use: a. The breakdown of the selling and administrative expenses is as follows: North South East Total Selling expenses: Sales salaries Direct advertising General advertising* Store rent Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment $ 329,000 $100,000 $119,000 $110,000 232,000 66,000 87,000 79,000 58,500 5,300 22,500 20,700 345,000 100,000 135,000 110,000 41,500 13,600 13,500 14,400 22,000 22,000 31,500 10,500 10,500 10,500 66,000 22.000 Total selling expenses $1,103,500 $327,400 $409,500 $366,600 Allocated on the basis of sales dollars. North Store South East Store management salaries General office salaries $115,000 36,000 $45,000 $ 34,000 78,000 20,400 30,000 27,600 16,000 50,000 88,200 26,760 32.400 29,040 97,500 25,500 37,500 34,500 Insurance on fixtures and inventory 44,500 2,000 16,500 11,00 46,000 55,000 Employment taxes General office-other Total administrative expenses $574,200 $166,660 $216,400 $191,140

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