ework Required information The following information applies to the questions displayed below.) 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 departmental income statements show the following. Dept. 200 Combined $290,000 $726,000 207,000 469, eae 83,6802 57.000 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2019 Dept. 100 Sales $436, Cost of goods sold 262,eee Gross profit 174,808 Operating expenses Direct expenses Advertising 17,808 Store supplies used 4, Depreciation-store equipment s.ee Total direct expenses 26,000 Allocated expenses Sales salaries 65, eea Rent expense 9,440 Bad debts expense 9,900 Office salary 18,720T Insurance expense 2.000 Miscellaneous office expenses 2.400 Total allocated expenses 107,466 Total expenses Net income (loss) $ 48,540 12,000 3.800 3,380 19, 180 29,000 7.800 8,388 45,100 39,000 4,728 8,188 12,480 1.100 1,600 104, cea 14,160 18,000 31,200 3,100 4,000 174,468 219,568 $ 37,440 06.103 $ (3,100) 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 who each earns $500 per week, or $25,000 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, Paused Show Finder AirDrop D ) @ @ ! 11 Apr 27 6 7 8 9 0 W omework 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 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, 70% of the insurance expense allocated to it to cover its merchandise inventory, and 25% of the miscellaneous office expenses presently allocated to it 2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department 200 assuming that it not affect Department 100's sales and gross profit. The statement should reflect the reassignment of the office worker to one-hall as a salesclerk ELEGANT DECOR COMPANY Forecasted Annual Income Statement Under Plan to Eliminate Department 200 Operating expenses Paused 9 Show Finder AirDrop 9