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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 2017 departmental income statements shows the following. ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 $447,000 261,000 186,000 Dept. 200 $286,e00 212,008 74,000 Combined $733,0e0 473.e00 Sales Cost of goods sold Gross profit Operating expenses Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses Allocated expenses Sales salaries Rent expense Bad debts expense office salary Insurance expense Miscellaneous office expenses Total allocated expenses Total expenses Net income (loss) 260,e00 29,5e0 8,70e 7,000 45,200 16,5ee 4,5e0 4,000 25,000 13,000 4,200 3.000 20,200 104,000 14,190 16,700 31,200 4,100 4.500 65,000 9.460 9,5ee 18,720 2,500 2,600 107 780 132,780 39,eee 4,730 7,200 12,480 1,600 1,900 174,690 66,910 87.110 219,890 $ 40,110 $ 53,220 $(13,110) 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 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 20O. 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 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 ill 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 undera long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 20o. e. Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies; 69% of the insurance expense allocated to it to cover its merchandise inventory, and 18% of the miscellaneous office expenses presently allocated to it Required: 1. Complete the following report showing total expenses, expenses that would be eliminated by closing Department 200 and the- expenses that would continue. The statement should reflect the reassignment of the office worker to one-half time as salesclerk. ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Eliminated Expenses Total Continuing Expenses Expenses Direct expenses Allocated expenses 0 S Total expenses Analysis Component 3. Reconcile the company's combined net income with the forecasted net income assuming that Department 200 is eliminated (list both items and amounts) (Amounts to be deducted should be indicated by a minus sign.) ELEGANT DECOR COMPANY Reconciliation of Combined Income with Forecasted Income Combined net income Forecasted net income Steeze Co. makes snowboards and uses the total cost approach in setting product prices. Its costs for producing 18,500 units follow The company targets a profit of $555,000 on this product. Fixed Costs Variable Costs per Unit Direct materials Direct labor $463,000 100, 325,000 $ 117 Overhead Selling Administrative 42 37 Overhead 6 Selling 1. Compute the total cost per unit. 2. Compute the markup percentage on total cost. (Round your final percentage answer to 1 decimal place.) 3. Compute the product's selling price using the total cost method. 1 Total cost per unit 2 Markup percentage 3 Selling price Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs for producing 28,000 units follow. The company targets a profit of $308,000 on this product. Variable Costs per Unit Direct materials Direct labor Fixed Costs $ 78 $678,000 Overhead Selling 33 Administrative 313,000 48 293,000 Overhead 23 Selling 1. Compute the variable cost per unit. 2. Compute the markup percentage on variable cost. (Round percentage answer to 2 decimal places.) 3. Compute the product's selling price using the variable cost method Variable cost per unit 1 2 Markup percentage 3 Selling price % 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 2017 departmental income statements shows the following. ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 $447,000 261,000 186,000 Dept. 200 $286,e00 212,008 74,000 Combined $733,0e0 473.e00 Sales Cost of goods sold Gross profit Operating expenses Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses Allocated expenses Sales salaries Rent expense Bad debts expense office salary Insurance expense Miscellaneous office expenses Total allocated expenses Total expenses Net income (loss) 260,e00 29,5e0 8,70e 7,000 45,200 16,5ee 4,5e0 4,000 25,000 13,000 4,200 3.000 20,200 104,000 14,190 16,700 31,200 4,100 4.500 65,000 9.460 9,5ee 18,720 2,500 2,600 107 780 132,780 39,eee 4,730 7,200 12,480 1,600 1,900 174,690 66,910 87.110 219,890 $ 40,110 $ 53,220 $(13,110) 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 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 20O. 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 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 ill 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 undera long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 20o. e. Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies; 69% of the insurance expense allocated to it to cover its merchandise inventory, and 18% of the miscellaneous office expenses presently allocated to it Required: 1. Complete the following report showing total expenses, expenses that would be eliminated by closing Department 200 and the- expenses that would continue. The statement should reflect the reassignment of the office worker to one-half time as salesclerk. ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Eliminated Expenses Total Continuing Expenses Expenses Direct expenses Allocated expenses 0 S Total expenses Analysis Component 3. Reconcile the company's combined net income with the forecasted net income assuming that Department 200 is eliminated (list both items and amounts) (Amounts to be deducted should be indicated by a minus sign.) ELEGANT DECOR COMPANY Reconciliation of Combined Income with Forecasted Income Combined net income Forecasted net income Steeze Co. makes snowboards and uses the total cost approach in setting product prices. Its costs for producing 18,500 units follow The company targets a profit of $555,000 on this product. Fixed Costs Variable Costs per Unit Direct materials Direct labor $463,000 100, 325,000 $ 117 Overhead Selling Administrative 42 37 Overhead 6 Selling 1. Compute the total cost per unit. 2. Compute the markup percentage on total cost. (Round your final percentage answer to 1 decimal place.) 3. Compute the product's selling price using the total cost method. 1 Total cost per unit 2 Markup percentage 3 Selling price Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs for producing 28,000 units follow. The company targets a profit of $308,000 on this product. Variable Costs per Unit Direct materials Direct labor Fixed Costs $ 78 $678,000 Overhead Selling 33 Administrative 313,000 48 293,000 Overhead 23 Selling 1. Compute the variable cost per unit. 2. Compute the markup percentage on variable cost. (Round percentage answer to 2 decimal places.) 3. Compute the product's selling price using the variable cost method Variable cost per unit 1 2 Markup percentage 3 Selling price %