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Northern Apparel Company owns two stores and management is considering eliminating the South store due to declining sales

16.
Northern Apparel Company owns two stores and management is considering eliminating the South store due to declining sales. Segmented contribution income statements are as follows and common fixed costs are allocated on the basis of sales.
North
South
Total
Sales
$475,000
120,000
$595,000
Variable costs
242,500
69,000
311,500
Direct fixed costs
72,500
35,500
108,000
Segment margin
160,000
15,500
175,500
Allocated fixed costs
104,500
48,000
152,500
Net Income
$55,500
($32,500)
$23,000
Northern feels that if they eliminate the South store, sales in the North store will decline by 20%. If they close the South store, overall company net income wiall?
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