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 2015 departmental income statements shows the following.

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 $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 workers 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; 69% of the insurance expense allocated to it to cover its merchandise inventory; and 20% of the miscellaneous office expenses presently allocated to it.

ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2015 Dept. 100 Dept. 200 Combined 449,000 281,000 730,000 Sales 474.000 262,000 212,000 Cost of goods sold 69,000 256,000 Gross profit 187000 Operating expenses Direct expenses Advertising Store supplies used Depreclatlon-Store equlpment 19700 44.900 Total direct expenses 25,200 Allocated expenses 46,800 Sales salarles 78,000 124,800 9,480 4760 Rent expense 14.240 17,400 Bad debts expense 9,800 7600 12,480 31,200 Office salary 18,720 Insurance expense 700 900 2.600 Miscellaneous office expenses 2.400 1,800 4.200 74,340 194,440 Total allocated expenses 120.100 Total expenses 94,040 145,300 239,340 Net Income (loss) 41700 (25,040) 16,660