Part A Acme Manufacturing is trying to decide whether to eliminate Department Z, which has produced low profits or losses for several years. The company's departmental income statements show the following: A Z Total Sales $700,000 $175,000 $875,000 Cost of goods sold 461,300 125,100 586,400 Gross profit 238,700 49,900 288,600 Operating expenses Direct expenses Advertising 27,000 3,000 30,000 Store supplies used 5,600 1,400 7.000 Depreciation-store equipment 14,000 7,000 21.000 Total direct expenses 46,600 11.400 58.000 Allocated expenses Sales salaries 70.200 21,400 93.600 Rent expense 22.080 5.520 27.600 Bad debts expense 21.000 4.000 25.000 office salary 20,800 5,200 26,000 Insurance expense 4.200 1.400 5.600 Miscellaneous office expense 1.700 2.500 4.200 Total allocated expenses 139,980 42.020 182,000 Total expenses 186,580 53.420 240,000 Net income (loss) $ 52,120$ (3,520) 48,600 The plant controller provided the following additional information: The company has one office worker who earns $500 per week, or $26,000 per year, and four salesclerks who each earns $450 per week, or $23,400 per year for each salesclerk. The full salaries of three salesclerks are charged to Department A. The full salary of one salesclerk is charged to Department Z Eliminating Department Z would avoid the sales salaries but not the office salary currently allocated to it. The store building is rented under a long-term lease that cannot be changed. Therefore, Department A will use the space and equipment currently utilized by Department Z. 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 Should Acme Manufacturing eliminate product Z? Show detailed calculations to support your decision. Part B Wally World manufactures cross country skis. Its cost of manufacturing 5,000 bindings is as follows: Direct materials $42,000 Direct labor 8,500 Variable overhead 5,000 Fixed overhead 16,000 Total manufacturing costs for 5,000 bindings $71,500 Wally World can purchase bindings from another manufacturer for $11.00 each. They would pay an additional $1.25 per unit to have the bindings shipped to its manufacturing plant. They would add their logo to each binding for an additional $0.70 per unit. If Wally World purchases the bindings they can avoid fixed overhead costs of $7,500. Required Should Wally World continue to manufacture the bindings or purchase them from the other manufacturer? Show detailed calculations to support your decision