i have to complete all parts using formulas & explain why I made the decision.

Problem 23-68 Analysis of possible elimination of a department A1 Exme Company's management is trying to decide whether to eliminate Department Z which has produced low profits or losses for several years. The company'Y 2017 departmental income statements show the following ESME COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. A Dept. Z Combined Sales $700,000 $175.000 5875.000 Cost of goods sold 461,300 125.000 586.400 Gross profit 238,700 49.90 288.600 Operating expertes Direct expenses Advertising 27.000 3,0%) 30,000 Store supplies used 5.600 1,100 7.000 Depreciation Store equipment 14.000 7.000 21.000 Total direct expenses 46.000 11,400 58.000 Allocated experises Sales salaries 70,200 23.100 03.600 Real espreme 2.ONO 5520 27.600 Baddebtien 21.00 4.000 25.) Bad debts epse Office salary Insurance expense Miscellaneous office expenses Total allocated expenses Total expenses Net income (los) 21,000 20.800 4.200 1.700 139.980 186.580 S52,120 4,000 25,000 5.200 26,000 1,400 5.600 2.500 4.200 42.020 182.000 53.420 240.000 (3.520) $ 48,600 Page 1001 In analyzing whether to eliminate Department Z, management considers the following items a. The company has one office worker who carns $500 per week or $26.000 per year and four salesclerks who each carta $450 per week or $23,400 per year for each salesclerk h. The fall salaries of three salesclerks are charged to Department. The full salary of one salesclerk is charged to Department 2 c. Eliminating Department 2 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 cam be done by the two remaining clerks if the one office worker works in sales half-time. Eliminating Department will allow this shint of duties. If this change is implemented, half the office worker's salary would he reported as aleatories 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 A will use the space and equipment currently used by Department CUTIENT UN ERRUTTON e. Closing Department Z will eliminate its expenses for advertising, bad debts, and store supplies; 65% of the insurance expense allocated to it to cover its merchandise inventory and 30% of the miscellaneous office expenses presently allocated to it. Required 1. Prepare a three-column report that lists items and amounts for (a) the company's total expenses (including cost of goods sold) - in column 1. (b) the expenses that would be eliminated by closing Department in column 2 and (c) the expenses that will continue-in column 3. Check out expenses S 26400 15181,060 2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department Zassuming that it will not affect Department A's sales and gross profit. The statement should reflect the reassignment of the office wirker to one-half time as a salesclerk a Forecasted not come without Department 555,560 Analysis Component 3. Reconcile the company's combined niet income with the forecasted net income assuming that Department Z is eliminated (list both items and amounts). Analyze the reconciliation and explain why you think the department should or should not be eliminated