the division equally among the stores in the division

Accounting Assignment- Please See Attached Excel version of homework

Suffolk, Inc. operates a chain of high-end home furnishing stores. Income statement for Central Division for the most recent year is as follows:

Sales

31,426,500

COGS

16,341,780

Gross Margin

15,084,720

Selling Expense:

Commissions

3,142,650

Advertising

2,028,020

Marketing admin

138,516

Store Expense:

Occupancy

1,075,305

Admin salaries

2,616,323

Sales salaries

1,855,144

Depreciation

186,520

Miscellaneous

42,605

Central Div Expense:

Salaries

328,470

Occupancy

73,423

Other

36,598

General

2,514,120

Expenses

14,037,694

Net Income

1,047,026

Sales commissions are paid at the same rate on all sales. "Central Division Expense" consists of costs directly related to operating the division headquarters, except

that "general" expense consists of corporate headquarters costs allocated among the divisions based on sales.

Part 1

25 points

Corporate headquarters also prepares income statements for each individual store. The Kansas City store is one of twelve stores in Central Division.

Sales for the KC store were $2,685,500. The store's gross margin percentage is 4 percentage points lower than the division as a whole.

Company policy is to allocate advertising/marketing costs of the division equally among the stores in the division.

Store expenses are all directly traceable to stores. The amounts for the KC store are:

Occupancy

86,436

Admin salaries

241,600

Sales salaries

136,250

Depreciation

22,200

Miscellaneous

4,623

Central division expenses, including general, are allocated to stores based on sales.

Prepare an income statement for the Kansas City store based on the above data and instructions.

Part 2

35 points

Because the Kansas City store appears to have poor profit performance, headquarters is considering closing the store.

Determine the actual profit/loss contribution of the store to the corporation, showing any necessary calculations.

Advertising costs of $55,725 related directly to the KC market.

Would you recommend closing the store? Explain.