Answer:
Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores. 
- total monthly sales should decrease from $1,800,000 to $1,380,000 = a $420,000 reduction
b. The monthly responsibility margin of Stores 1 and 2. 
- store 1 responsibility margin increased from 10% to 12.55% (2.55% increase)
- store 2 responsibility margin increased from 9% to 13.69% (4.69% increase)
c. The company’s monthly income from operations.
- increased from $72,000 to $140,200 ($70,200 increase)
Explanation:
                                                 Store                 Store                Total                                           
                                                    1                         2
Sales                                         $660,000          $720,000     $1,380,000
Variable costs                          $409,200          $453,600        $862,800
Contribution margin                $250,800          $266,400         $517,200
Controllable fixed costs           $120,000          $102,000        $222,000
Performance margin                $130,800           $164,600        $292,200
Committed fixed costs              $48,000            $66,000         $114,000
Store responsibility margin      $82,800             $98,600        $178,200
Common fixed costs                                                                    $38,000
Income from operations                                                             $140,200