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.

[The following information applies to the questions displayed below.j 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 Dept. 100 Dept. 200 Combined 444,000 285.000 Sales 729.000 476,000 Cost of goods sold 266,000 210.000 75.000 253,000 Gross profit Operating expenses Direct expenses Advertising 17,500 13.500 31,000 Store supplies used 5.500 5.000 10.500 Depreciation-Store equipment 4.400 2.900 7,300 2100 27,400 48,800 Total direct expenses Allocated expenses 65,000 Sales salaries 39.000 04.000 Rent expense 9,460 4.760 14,220 Bad debts expense 9,600 7700 17,300 36,400 Office salary 21.840 14,560 Insurance expense 900 1100 3.000 Miscellaneous office expenses 2,300 1.500 3.800 Total allocated expenses 68,620 178.720 Total expenses 90,020 227,520 S40500 s 05020) 25.480 Net income (loss) In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who earns $700 per week, or $36.400 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 wi be quitting soon. Management believes that their work can be done by the other two clerks if the one office worker works in sales halftime. Eliminating Department 200 allow this shift of duties. If this change is mplemented, 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; 74% of the insurance expense allocated to it to cover its merchandise inventory; and 15% of the miscellaneous office expenses presently allocated to it