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 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 70 of the insurance expense allocated to it to cover its merchandise inventory and 25 of the miscellaneous office expenses presently allocated to it ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept 100 Dept 200 Combined $439,000 282,000 $721,000 Sales Cost of goods sold Gross profit Operating expenses 170,000 6 8483,000 238,000 269,000 68,000 Direct expenses Advertising Store supplies used Depreciation Store equipment Total direct expenses 15,000 5,000 4,600 24,600 10,000 4,500 2,900 17,400 25,000 9,500 7,500 42,000 Allocated expenses Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses Total allocated expenses 31,200 4,770 7,800 12,480 1,600 2,000 95,195Q 197,040 52,000 9,470 9,900 18,720 2,500 2,600 83,200 14,240 17,700 31,200 4,100 4,600 155,040 59,850 77,250 119,790 259 $ 50,210 $ (9,250) Total expenses Net income (loss)

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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

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.

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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; 70% of the insurance expense allocated to it to cover its merchandise inventory; and 25% of the miscellaneous office expenses presently allocated to it.

ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 Dept. 200 Combined $439,000 282,000 $721,000 Sales Cost of goods sold Gross profit Operating expenses 170,000 6 8483,000 238,000 269,000 68,000 Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses 15,000 5,000 4,600 24,600 10,000 4,500 2,900 17,400 25,000 9,500 7,500 42,000 Allocated expenses Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses Total allocated expenses 31,200 4,770 7,800 12,480 1,600 2,000 95,195Q 197,040 52,000 9,470 9,900 18,720 2,500 2,600 83,200 14,240 17,700 31,200 4,100 4,600 155,040 59,850 77,250 119,790 :259 $ 50,210 $ (9,250) Total expenses Net income (loss)