Income statements

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.NorthSouthTotalSales$475,000120,000$595,000Variable costs242,50069,000311,500Direct fixed costs72,50035,500108,000Segment margin160,00015,500175,500Allocated fixed costs104,50048,000152,500Net Income$55,500($32,500)$23,000Northern 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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