E23-10 Hold-It.com is an e-tailer of cedar and plastic storage containers. It has two divisions: Cedar and Plastic. The company's income statement for 20X3 appears as follows: Sales revenue... Cost of goods sold. Gross profit... Operating expenses: Salaries expense. Depreciation expense.. Advertising expense. Other expenses Total operating expenses. Operating income. $325,000 116,000 209,000 $ 78,000 20,000 4,000 10,000 112,000 $ 97,000 Hold-It.com sales are $136,000 of cedar storage containers and $189,000 of plastic containers. Cost of goods sold is distributed $42.000 to Cedar and $74.000 to Plastic. Salaries are traced directly to departments: Cedar $36.000, and Plastic $42,000. The Cedar Department accounts for 80% of advertising. Depreciation is allocated based on the warehouse square footage occupied by each department: Cedar has 20.000 square feet and Plastic has 30,000 square feet. Other expenses are allocated based on the number of employees. Each department cur- rently employs an equal number of employees. Required 1. Prepare departmental income statements that show revenues, expenses, and operating income for each of the two departments. 2. Which of the expenses in the departmental performance report are the most important for evaluating Hold-It.com department managers? Give your reason.