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 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 $ 441,000 $ 282,000 $ 723,000 Cost of goods sold 261,000 213,000 474,000 Gross profit 180,000 69,000 249,000 Operating expenses Direct expenses Advertising 16,500 13,500 30,000 Store supplies used 5,500 4,900 10,400 DepreciationStore equipment 4,800 3,700 8,500 Total direct expenses 26,800 22,100 48,900 Allocated expenses Sales salaries 52,000 31,200 83,200 Rent expense 9,450 4,780 14,230 Bad debts expense 9,500 7,700 17,200 Office salary 18,720 12,480 31,200 Insurance expense 1,900 1,100 3,000 Miscellaneous office expenses 2,100 1,400 3,500 Total allocated expenses 93,670 58,660 152,330 Total expenses 120,470 80,760 201,230 Net income (loss) $ 59,530 $ (11,760 ) $ 47,770 In analyzing whether to eliminate Department 200, management considers the following: 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. 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. 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. 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. 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 22% of the miscellaneous office expenses presently allocated to it.