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 2017 departmental income statements shows the following ELEGANT DECOR COMPANY Departmental Income Stateents For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Dept. 100 Dept. 200 Combined 442,000 $287,000$729,000 212,000 75,000 261.000 181,000 473,000 256,000 Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses 16,000 4,000 4,200 24,200 11,500 3, 600 2.800 17,900 27,500 7,600 7,000 42,100 Allocated expenses Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses Total allocated expense 104,000 14,150 16,800 36,400 2,600 4,600 178,550 220,650 46,650 $ (11,300) 35,350 65,000 9,410 9,500 21,840 1,700 2,700 110,150 134,350 39,000 4,740 7,300 14,560 900 1,900 68,400 86,300 Total expenses Net income (loss) In analyzing whether to eliminate Department 200, management considers the following a. The company has one office worker who earns $700 per week, or $36,400 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 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, 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; 69% of the insurance expense allocated to it to cover its merchandise inventory, and 21% of the miscellaneous office expenses presently allocated to it. Requirec 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. Answer is complete but not entirely correct Answer is complete but not entirely correct ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Expenses Eliminated Continuing Expenses $473,000 $ 212,000 Expenses 261,000 Cost of goods sold Direct expenses Advertising Store supplies used Depreciation-Store uipment 27,5006,000 ,6004,000 07,000 11.500 7,600 7,000 Allocated expenses 104,000 14,150 16,87,399 0,200 14,150 9,401 36,4008,2008,200 6211,979 94,201 693,650 287,519 S 406,131 33,0070.2 Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office 7.399 2,600 4,600 399 expenses lotal expenses