Elegant Decor Company's management Is trylng to decide whether to ellminate 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 $ 446,000 265,000 $281,000 213,000 Dept. 200 Combined 727,000 478,000 249,000 Gross profit Operating expenses 181,000 68,000 Direct expenses Advertislng Store supplies used Depreclation-Store equlpment 16.500 4.500 4,000 13,000 4,200 3,000 29,500 8,700 7,000 Total direct expenses 25,000 20,200 45,200 Allocated expenses Sales salarles Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses 52,000 9.430 9,800 15,600 1,700 2,400 31,200 4,740 7,800 10,400 900 1,800 83,200 14,170 17,600 26,000 2,600 4,200 Total allocated expenses 90,930 115,930 s 65,07 147,770 192,970 $ (9,040) 56,030 56.840 Total expenses 77,040 Net Income (loss) In analyzing whether to ellminate Department 200, management conslders the following: a. The company has one office worker who earns $500 per week, or $26,000 per year, and four sales b. The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk Is clerks who each earn $400 per week, or $20,800 per year for each salesclerk. charged to Department 200. The salary of the fourth clerk, who works half-time in both departments, Is dlvided 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 qultting soon. Management belleves that their work can be done by the other two clerks If the one office worker works In sales half-tlme. 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 salarles and half would be reported as office salary. d. The store bullding 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; 75% of the insurance expense allocated to it to cover its merchandise inventory: and 24% of the miscellaneous office expenses presently allocated to it