. Department Profits. Biroscak Sales runs several small department stores. In 1999, his Toledo store showed the following results:

\section*{Required:}
Comment on the impact of each of the following actions.

(a) Delete Department 2 .

(b) Delete Department 3 .

(c) Delete Departments 2 and 3 .

(d) Replace Departments 2 and 3 with a new Department 5 which would earn a positive direct contribution margin of \(\$ 25\).

(e) Reallocate the common expenses.

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Dept. 1 Dept. 2 Dept. 3 Sales...... $ 700 $1,000 $ 800 Cost of goods sold (350) (500) (450) Dept. 4 $1,500 (800) Gross margin $ 350 $ 500 $ 350 $ 700 Totals $ 4,000 $ 1,900 (2,100) Direct expenses (100) (400) (400) (300) (1,200) Common expenses. (100) (300) (100) (300) (800) Net income.. $ 150 $ (200) $(150) $ 100 $ (100)