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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
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 departmental income statements show the following. Sales Cost of goods sold. Gross profit ELEGANT DECOR COMPANY Departmental Income Statements. For Year Ended December 31, 2019 Dept. 100 Dept. 200 Combined $444,000 $285,000 $729,000 264,000 211,000 475,000 180,000 74,000 254,000 Operating expenses Direct expenses Advertising 16,000 11,500 27,500 Store supplies used 4,500 4,000 8,500 Depreciation-Store equipment 4,800 3,400 8,200 Total direct expenses 25,300 18,900 44,200 Allocated expenses Bad debts expense Sales salaries Rent expense Office salary Insurance expense Miscellaneous office expenses Total allocated expenses Total expenses 52,000 31,200 83,200 9,430 4,700 14,130 9,600 7,500 17,100 18,720 12,480 31,200 2,300 1,500 3,800 2,500 1,800 4,300 94,550 59,180 153,730 119,850 78,080 Net income (loss) $ 60,150 $ (4,080) 197,930 $ 56,070
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