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Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which has produced fosses or low profits for several years. The company's 2017 departmental income statements shows the following Dept. 200 $280,000 207.000 73,000 Combined $728.000 467,000 261.000 ELEGANT DECOR COMPANY Departmental Income Statements Por Year Ended December 31, 2017 Dept. 100 Sales $448,000 Cost of goods sold 260,000 Gross profit 188,000 Operating expenses Direct expenses Advertising 17.000 Store supplies used 4,000 Depreciation-store equipment 5,000 Total direct expenses 26,000 Allocated expenses Sales salaries 78,000 Rent expense 9,460 Bad debts expense 9.500 office salary 15,600 Insurance expense 1,700 Miscellaneous office expenses 2,800 Total allocated expenses 117,069 Total expenses 143,069 Het income (100) $ 44,940 13,000 3,600 3.500 20,100 30,000 7.500 3,500 46,100 46,800 4,790 7,400 10,400 900 2.000 72,290 92,390 $(19,3903 124,800 14,250 16.900 26,000 2,600 4.800 189,350 235,450 $ 25,550 In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who earns $500 per week, or $26,000 per year, and four sales clerks who each earn $600 per week, or $31,200 per year for each salesclerk. h The full cataries of two calperlerle are charned to Department on the full alarunt one calmerlerk le rhamnerlin In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who earns $500 per week, or $26,000 per year, and four sales clerks who each earn $600 per week, or $31,200 per year for each salesclerk b. The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk is charged to Department 200. The salary of the fourth clerk, who works half-time in both departments, is divided evenly between the two departments c. Eliminating Department 200 would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. Two salesclerks have indicated that they will be quitting soon Management believes that their work can be done by the other two clerks if the one office worker works in sales half-time, Eliminating Department 200 will allow this shift of duties. If this change is implemented, half the office worker's salary would be reported as sales salaries and half would be reported as office salary d. The store building is rented under a long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 200, e. Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies; 66% of the Insurance expense allocated to it to cover its merchandise inventory, and 23% of the miscellaneous office expenses presently allocated to it Required: 1. Complete the following report showing total expenses, expenses that would be eliminated by closing Department 200 and the expenses that would continue. The statement should reflect the reassignment of the office worker to one-half time as salesclerk ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Eliminated Continuing Expenses Expenses Expenses Required: 1. Complete the following report showing total expenses, expenses that would be eliminated by closing Department 200 and the expenses that would continue. The statement should reflect the reassignment of the office worker to one-half time as salesclerk ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Eliminated Continuing Expenses Expenses Expenses Cost of goods sold Direct expenses Allocated expenses Total expenses $ 0 $ 0 $ 0

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