ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 Dept. 200 Combined $448,000 $285,000 $733,000 Sales 179,00e oo482,000 72,000 Cost of goods sold Gross profit Operating expenses Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses Allocated expenses Sales salaries 269,000 213,000 251,000 16,000 4,500 4,400 11,500 4,100 2,900 18,500 27,500 8,600 7,300 24,900 43,400 104,000 14,190 17,200 31,200 3,800 4,500 65,000 9,410 9,500 18,720 2,300 2,600 39,000 4,780 7,700 12,480 1,500 1,900 Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses Total allocated expenses Total expenses 107,530 67,360 174,890 132,430 85,860 218,298 $ 46,570 (13,860 32,710 Net income (loss) In analyzing whether to eliminate Department 200, management considers the following a. The company has one office worker who earns $600 per week, or $31,200 per year, and four sales clerks who each earn $500 per week, or $26,000 per year for each salesclerk 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 salesclerks have indicated that they will be quitting soon. Management believes 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 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-term lease that cannot be changed. 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; 68% of the insurance expense allocated to it to cover its merchandise inventory; and 16% of the miscellaneous office expenses presently allocated to it. Required: 1. Complete the following report showing total expenses, expenses that would be eliminated by closing Department 200 and the expenses that would continue. The statement should reflect the reassignment of the office worker to one-half time as salesclerk. ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 TotalEi Expenses Expenses Expenses Eliminated Continuing Direct expenses Allocated expenses Total expenses