Elegant Decor Companys management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several years. The companys departmental income statements show the following.

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. Dept. 208 $284, eee 212,080 72,00 Combined $732,eee 476,000 256,880 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2019 Dept. lee Sales $448,eee Cost of goods sold 264, eee Gross profit 184, eee Operating expenses Direct expenses Advertising 15,5ee Store supplies used 5,580 Depreciation-store equipment 4,480 Total direct expenses 25, 4ee Allocated expenses Sales salaries 78,eee Rent expense 9,450 Bad debts expense 9,680 Office salary 18,720 Insurance expense 2,500 Miscellaneous office expenses 2,700 Total allocated expenses 129,970 Total expenses 146,379 Net income (loss) $ 37,630 11,000 4,900 3,109 19,000 26,5ee 10,400 7,500 44,400 46,880 4,790 7,480 12,480 1,800 2,080 75,270 94,270 $(22,270) 124,800 14,240 17,eee 31, 2ee 4,3ee 4,70 196,240 240, 640 $ 15,360 In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who eams $600 per week, or $31,200 per year, and four salesclerks who each earns $600 per week, or $31,200 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 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 23% 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 $ s