value: 1.00 points Superior Markets, Inc., operates three stores in a large metr

Question

value: 1.00 points 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 re South East Store Store 735,000 625,000 Total Sales $3,400,000 S740,000 $1,360,000 $1,300,000 Cost of goods sold 1,870,000 420,000 715,000 Gross margin 1,530,000 320,000 585,000 Selling and administrative expenses 825,000 235,400 403,000 110,000 317,000 156,900 272,600 136,100 Selling expenses Administrative expenses Total expenses 1,228,000 345,400 473,900 408,700 Net operating income (loss) S 302,000 (25,400) S 151,100 S 176,300 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 North Store East Store South Total re Selling expenses: $220,600 S 64,500 $ 79,400 $ 76,700 55,000 76,000 52,000 11,100 20,400 19,500 89,000 24,000 107,000 6,600 7,400 3,400 Sales salaries Direct advertising General advertising* 183,000 51,000 320,000 18,000 22,200 10,200 5,000 Depreciation of store fixtures Delivery salaries Depreciation of delivery equipment 7.400 Total selling expenses $825,000 $235,400 $317,000 $272,600 Allocated on the basis of sales dollars North Store South Store Store Administrative expenses Store management salaries General office salaries Insurance on fixtures and inventory Utilities Employment taxes General office-other $ 76,000 S 23,000 $32,000 $ 21,000 51,000 29,000 106,530 32,685 38,620 55,470 85,000 11,200 20,400 9,400 8,700 11,000 9,300 35,225 15,915 20,880 18,675 18,500 34,000 32,500 Total administrative expenses $403,000 110,000 $156,900 $136,100

Explanation / Answer

1)if north stotre will be closed then what about profit performance?

Addition information:

calculation of SELLING expenses:

ADJUSTED ADMINISTRATION EXPENSES ARE:

Less: dischrges employee (compensation 5600 per quarter)

325300

(5600)

179950

(5600)

145350

-----

2) as per above information based :

with maintain of north store then profit performance was $302000 and if north store was shut down then profit performance was $291300 so difference is $10700 was reduced. Generally if any company go for shutdown any plant or store because of avoid the loss but here reduce profit performance also so better to continue store also.

better to reduce the selling expenses then we will avoid the loss and turn into profit performance

Particulars Total south east sales $2660000 $1360000 $1300000 less: cost of goods sold $1450000 $735000 $715000 Gross margin (A) $1210000 $625000 $585000 SELLIN & ADMIN EXPENSES Selling expenses $599000 $321700 $277300 administration expenses $320300 $174350 $145350 TOTAL SEELING & ADMN.EXPENSES (B) $919300 $496050 $422650 NET INCOME (A-B) $291300 $128950 $162350

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.