Data table More info The 374,000 of magic department fixed expenses include the compensation of employees of 135,000. These employees will be released if the magic department is abandoned. All of the magic department's equipment is fully depreciated, so none of the 374,000 pertains to such items. Furthermore, disposal values of equipment will be exactly offset by the costs of removal and remodeling. If the magic department is dropped, the manager will use the vacated space for either more general merchandise or more electronic products. The expansion of general merchandise would not entail hiring any additional salaried help, but more electronic products would require an additional person at an annual cost of 25,000. The manager thinks that sales of general merchandise would increase by 245,000; electronic products, by 185,000. The manager's modest predictions are partially based on the fact that she thinks the magic department has helped lure customers to the store and, thus, improved overall sales. If the magic department is closed, that lure would be gone. London Toy Store is on Regent Street in London. It has a magic department near the main door. Suppose that management is considering dropping the magic department, which has consistently shown an operating loss. The predicted income statements, in thousands of pounds (), are shown below (for ease of analysis, only three product lines are shown). (Click the icon to view the predicted income statements.) (Click the icon to view additional information.) Requirement 1. Should the magic department be closed? Explain, showing computations. Requirement 1. Should the magic department be closed? Explain, showing computations. Let's begin by analyzing the option of dropping the magic department and expanding the general merchandise department. Then you the analy dropping the magic department and expanding the electronics products department. (Enter all amounts in thousands of pounds. Round your answer to the nearest thousands of pounds. For cell with a 0 value, make sure to enter "0" in the appropriate cell.)