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 $438,000 289,000 727,000 267,00e Sales 171,000 7479,00 248,000 Cost of goods sold Gross profit 212,000 77,000 Operating expenses Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses Allocated expenses Sales salaries 30,500 7,500 7,600 45,600 17,000 4,000 4,600 25,600 13,500 3,500 3,000 20,000 65,000 9,440 9,900 18,720 1,700 2.400 39,000 4,730 7,700 12,480 1,000 1,800 104,000 14,170 17,600 31,200 2,700 Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses Total allocated expenses Total expenses 4,200 66,710 107,160 173,870 132,76e 86,710 219,47e $38,240 (9,7128,530 Net income (loss) 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 $500 per week, or $26,000 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: 66% 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 nses nses Direct expenses Allocated expenses Total expenses