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 2015 departmental income statements shows the following. ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2015 Sales Cost of goods sold Dept. 100 $446,000 264,000 Dept. 200 $ 280,000 215,000 Combined $726,000 479,000 182,000 65,000 247,000 Gross profit Operating expenses Direct expenses Store supplies used Depreciation-Store equipment 16,500 4,500 5,000 12,500 4,000 3,600 29,000 8,500 8,600 Total direct expenses 26,000 46,100 Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses 78,000 9.440 9,700 18720 2,100 2,400 46,800 4,740 7,800 2,480 1,300 1,800 124,800 14,180 7,500 31,200 3,400 4,200 74,920 120,360 46,360 $ 35,640 Total allocated expenses 195,280 241,380 $ (30,020) $5,620 Total expenses 95,020 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 b. The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk is who each earn $600 per week, or $31,200 per year for each salesclerk. 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 alocated 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; 74% of the insurance expense allocated to it to cover its merchandise inventory: and 20% of the miscellaneous office expenses presently allocated to it