Can anyone answer this its in entirety? Can anyone explain it as well
c. Eliminating Department I would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. Twe salesclerks have indicated that they will be quitting seen. Management believes that their wort-c can be done by the two remaining clerks if the one office worker works in sales halftime. Eliminating Department Z 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-teen lease that cannot be changed. Thereforer Department A will use the space and equipment currently used by Department Z. e. Closing Department 2 will eliminate its expenses for advertising. bad debts, and store supplies; 55% of the insurance expense allocated to it to cover its merchandise inventory; and 3th\": of the miscellaneous orifice expenses presently allocated to it. Required 1. Prepare a three-oclumn report that lists items and amounts for {a} the company's total expenses {including cost of goods sold}in column 1r {b} the expenses that would be eliminated by closing Department Zin column 2.. and to} the expenses that will continuein column 3. 2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department 2 assuming that it will not affect Department A's sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerlt. Anetysis Component 3. Reconcile the corn pany's combined net income with the forecasted net income assuming that Department 2 is eliminated {list berth items and amounts}. Analyze the reconciliation and explain why you think the department should or should not be eliminated. Check [1] Total expenses: [3] 3326.400. to} $131 .9150 [2] Forecasted net income without Department 2. $55.56!] H Esme Company's management is trying to decide whetherto eliminate Department 2. which has produced low profits or losses for several years. The company's 2015 departmental inoome statements show the following. ESHE COMPANY Departmental Income Statement: For Year Ended Decen'ther 3|_1 10 I5 Dept. :0. Dept. 2 Combined sates ................................... $00,000 $15,000 SEEM Cost: ot pods sold ....................... Slim lgl 506.400 Gross prom: ............................. 1.107000 10.900 100.000 Operating memes DIect etantses Adm-Using .......................... 1T,000 3.000 30.000 Store apples used ................... 5.600 L400 3".000 quedattonStore equgmem ........ H,000 1000 1|.000 Told cl'ectettpemes ................. 46,600 I L400 55.000 Allocated etqmuea Sales alarm ........................ T0200 13.100 93000 new: enqtmse ........................ 11,000 5.510 17.000 lhd debt: airplane ................... 1|,000 4.000 15.000 (limos ll-y ........................ 10.\" 5.200 10.000 hm apnoea .................... 1t,2ll:lll:| L400 5.000 Phoelaneous otttoe mqntms .......... I 3'00 3 500 4.100 Toni aborted etqtmsaa ............... IJ'im 13,010 l01000 Total amputees ........................... lasso 53.410 140.000 Net hoome {loss} ........................ i syn 5 13.510] ! 40.000 In analyzing whether to eliminate Department 2, management considers the following items: a. The company has one oioe worker who earns $500 per week or $20,000 per year and four salesolerlvts who each earn $450 per week or $23,400 per year for each salesclerk. h. The full salaries of three saleselerks are charged to Department A. The full salary of one saleselerk is charged to Department 2
