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Home Decor Companys management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several years. The companys 2011 departmental income statement shows the following.

HOME DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2011
	Dept. 100					Dept. 200					Combined
Sales		$	449,000				$	284,000				$	733,000
Cost of goods sold			265,000					209,000					474,000
Gross profit			184,000					75,000					259,000
Operating expenses
Direct expenses
Advertising			17,500					14,000					31,500
Store supplies used			5,000					4,600					9,600
DepreciationStore equipment			4,000					2,800					6,800
Total direct expenses			26,500					21,400					47,900
Allocated expenses
Sales salaries			65,000					39,000					104,000
Rent expense			9,490					4,770					14,260
Bad debts expense			9,900					7,700					17,600
Office salary			18,720					12,480					31,200
Insurance expense			1,500					600					2,100
Miscellaneous office expenses			2,200					1,500					3,700
Total allocated expenses			106,810					66,050					172,860
Total expenses			133,310					87,450					220,760
Net profit (loss)		$	50,690				$	(12,450)				$	38,240

In analyzing whether to eliminate Department 200, management considers the following:

a.	The company has one office worker who earns $600 per week, or $31,200 per year, and four sales clerks who each earn $500 per week, or $26,000 per year.
b.	The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk is charged to Department 200. The salary of the fourth clerk, who works half-time in both departments, is divided evenly between the two departments.
c.	Eliminating Department 200 would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. Two salesclerks have indicated that they will be quitting soon. Management believes that their work can be done by the other two clerks if the one office worker works in sales half-time. Eliminating Department 200 will allow this shift of duties. If this change is implemented, half the office workers salary would be reported as sales salaries and half would be reported as office salary.
d.	The store building is rented under a long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 200.
e.	Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies; 73% of the insurance expense allocated to it to cover its merchandise inventory; and 20% of the miscellaneous office expenses presently allocated to it. Required: 1. Complete the three-column report that lists items and amounts for (a) the companys total expenses (including cost of goods sold)in column 1, (b) the expenses that would be eliminated by closing Department 200in column 2, and (c) the expenses that will continuein column 3. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) 2. Complete the forecasted annual income statement for the company reflecting the elimination of Department 200 assuming that it will not affect Department 100s sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerk. (Input all amounts as positive values. Omit the "$" sign in your response.)

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