0-12 Required Information [The following information applies to the questions displayed below] Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several years. The company's 2017 departmental income statements shows the following ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 1 Dept. 200 Combined Sales $448, eee $280, 880 $728,000 Cost of goods sold 261,600 209 eee 470.ee Gross profit 187,000 71,eee 258,eee Operating expenses Direct expenses Advertising 17, see 14,500 32,000 Store supplies used 4, see 8,5ee Depreciation-Store equipment 4, eee 2.400 6,400 Total direct expenses 26,000 20. see 46,9ee Allocated expenses Sales salaries 65,00 39,000 184, eee Rent expense 9,440 4,720 14,160 Bad debts expense 9,60 7, see 17.100 Office salary 21,840 14,568 36,400 Insurance expense 1,700 Bee 2,500 Miscellaneous office expenses 2.200 3. see Total allocated expenses 109,780 68,180 177,968 Total expenses 135.788 89.ese 224,860 Net Income (loss) $ 51,220 $(18,ese) $ 33,140 In analyzing whether to eliminate Department 200, management considers the following a. The company has one office worker who earns $700 per week or $36.400 per year, and four sales clerks who each earn $500 per week or $26,000 per year for each salescierk. 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 salescierks have indicate that they will be quitting soon Management beiteves 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 changes 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 changes. 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: 71% of the insurance expense allocated to it to cover its merchandise Inventory and 225% of the miscellaneous office expenses presently allocated to it