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. Dept. 200 $281,000 211,000 70,000 Combined $ 717,000 475,000 242,000 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 Sales $436,000 Cost of goods sold 264,000 Gross profit 172,000 Operating expenses Direct expenses Advertising 16,500 Store supplies used 6,000 Depreciation-Store equipment 4,600 Total direct expenses 27, 100 Allocated expenses Sales salaries 52,000 Rent expense 9,440 Bad debts expense 9,500 office salary 21,840 Insurance expense 2,300 Miscellaneous office expenses 2,700 Total allocated expenses 97,780 Total expenses 124,880 Net income (loss) $ 47, 120 13,500 5,700 3,200 22,400 30,000 11,700 7,800 49,500 31, 200 4,720 7,600 14,560 1,500 2,000 61,580 83,980 $(13,980) 83,200 14,160 17,100 36,400 3,800 4,700 159,360 208,860 $ 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 $400 per week, or $20,800 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; 70% of the insurance expense allocated to it to cover its merchandise inventory; and 20% 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 Total Eliminated Continuing Expenses Expenses Expenses Direct expenses Allocated expenses Total expenses $ 0 $ 0 $ 0