Question

pplications 0 Saved Help Save & Exit Submit Check my work East Store $1,320,000 Superior Markets, Inc. Income Statement For the Quarter Ended September 30 North South Total Store Store Sales $3,500,000 $780,000 $1,400,000 Cost of goods sold 1,925,000 450, eee 749,000 Gross margin 1,575,000 330,000 651,000 Selling and administrative expenses: Selling expenses 827,000 236,400 317,500 Administrative expenses 408,eee 111,000 158,400 Total expenses 1,235,000 347,400 475,900 Net operating income (loss) $ 340,eee $(17,400) $ 175,100 594, 000 273,100 138,600 411,700 182,300 $ 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 that are shown above is as follows: North South East < Prev 2 of 3 # Next > la 2:51 PM 2/19/2020 co search

hi! can you please answer required 1-5. thanks have a great day

Answer 1

Solution 1 to 5:

G H Solution 1 Computation of Avoidable Employee Salaries Sales salaries Delivery Salaries Store manager Salaries (23500-11700) General office salaries Salary of New manager Total 62600 4500 11800 5850 10700 95450 11 12 13 Solution 2 Computation of Avoidable Employment Taxes Avoidable employee Salaries *Employment tax rate Avoidable Employment Taxes 95450 15% 14318 14 15 16 17 18 19 20 21 -330000 22 24 25 26 27 28 29 Solution 3 Computation of financial advantage (disadvantage) of closing the North Store Gross Margin lost if North store closed Cost that can be avoided: Sales salaries 62600 Delivery Salaries 4500 Store manager Salaries (23500-11700) 11800 General office salaries 5850 Salary of New manager 10700 Employment Tax 14318 Direct Advertising 56000 Store Rent 90000 Insurance on Inventory (9000*2/3) 6000 Utilities 31505 Total Cost Avoided Financial advantage (Disadvantage) of Closing North Store 30 31 32 33 293273 -36728 34 35 36 Solution 4: No, we would not recommend closing the North Store as there is het financial disadvantage of ($36728). 38 39 40 41 42 Solution 5: Contribution margin ratio of East store Gross Margin of East store Sales of East Store Contribution margin ratio of East Store 43 44 45 594000 1320000 45.00% 46 47 48 49 Under New assumption: Computation of Financial advantage (disadvantage) of closing the North Store Gross Margin lost if North store closed -330000 Gross Margin gained from east store ($780,000*1/4*45%) 87750 Net loss of Gross Margin -242250 Less: Total Cost that can be avoided (Computed in part 3) 293273 Financial advantage (disadvantage) of closing the North Store 51023 50 51 52 53 Sheet278 Sheet181 (30) Sheet181 (31) ) Sheet540 Sheet