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. ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 Dept. 200 Combined Sales $444, 000 $288, 000 $732, 000 Cost of goods sold 260,000 210, 000 470,000 Gross profit 184, 000 78, 000 262,000 Operating expenses Direct expenses Advertising 17,000 13, 500 30,500 Store supplies used 4,000 3, 700 7, 700 Depreciation-Store equipment 4,000 2, 800 6,800 Total direct expenses 25,000 20,000 45,000 Allocated expenses Sales salaries 52,000 31, 200 83, 200 Rent expense 9, 460 4, 740 14, 200 Bad debts expense 9, 800 7, 700 17,500 Office salary 18 , 720 12, 480 31, 200 Insurance expense 1, 700 1, 000 2, 700 Miscellaneous office expenses 2,300 1 , 600 3,900 Total allocated expenses 93,980 58, 720 152, 700 Total expenses 118, 980 78, 720 197,700 Net income (loss) $ 65, 020 1720 $6 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 $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 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 Total Eliminated Continuing Expenses Expenses Expenses Cost of goods sold $ 470,000 $ 210,000 $ 260,000 Direct expenses Advertising 30,500 13,500 17,000 Store supplies used 7,700 3,700 4,000 Depreciation-Store equipment 6,800 6,800 Allocated expenses Sales salaries 83,200 41,600 % 41,600 % Rent expense 14,200 14,200 Bad debts expense 17,500 7,700 9,800 Office salary 31,200 31,200 x Insurance expense 2,700 700 2,000 Miscellaneous office expenses 3,900 256 36,400 (X Total expenses $ 667,700 $ 277,456 $ 423,000 *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted