Papa Friedo's Pizza Store No All Employees Except the Store Manager Would Be Discharged

question 87

Essay

Papa Friedo's Pizza store no. 16 has fallen on hard times and is about to be closed. The following figures are available for the period just ended: $$\begin{array} { l r } \text { Sales } & \$ 205,000 \\\text { Cost of sales } & 67,900 \\\text { Building occupancy costs: } & \\\quad \text { Rent } & 36,500 \\\quad \text { Utilities } & 15,000 \\\text { Supplies used } & 5,600 \\\text { Wages } & 77,700 \\\text { Miscellaneous } & 2,400 \\\text { Allocated corporate overhead } & 16,800\end{array}$$
All employees except the store manager would be discharged. The manager, who earns $27,000 annually, would be transferred to store no. 19 in a neighboring suburb. Additionally, no. 16's furnishings and equipment are fully depreciated and would be removed and transported to Papa Friedo's warehouse at a cost of $2,800.
Required:
A. What is store no. 16's reported loss for the period just ended?
B. Should the store be closed? Why?
C. Would Papa Friedo's likely lose all $205,000 of sales revenue if store no. 16 were closed? Explain.

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Definitions:

Expert Power

The influence one possesses as a result of experience, special skill, or knowledge in a particular field.

Reward Power

The capacity to influence others through the distribution or promise of benefits and incentives.

Legitimate Power

The authority derived from a formal position or role within an organization, granting the ability to influence others' actions or decisions.

Referent Power

Referent power is a form of personal power that stems from being admired, respected, and liked by others, often leading to influence through the desire of others to be associated with the person.