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 $281,000 209,000 72,000 Combined $718,000 477,000 241,000 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2019 Dept. 100 Sales $437,000 Cost of goods sold 268,000 Gross profit 169,000 Operating expenses Direct expenses Advertising 16,500 Store supplies used 4,000 Depreciation-Store equipment 4,400 Total direct expenses 24,900 Allocated expenses Sales salaries 65,000 Rent expense 9, 460 Bad debts expense 9,600 Office salary 18, 720 Insurance expense 2,300 Miscellaneous office expenses 2,700 Total allocated expenses 107,780 Total expenses 132, 680 Net income (1033) $ 36, 320 13,000 3,400 2,900 19, 300 29,500 7,400 7,300 44,200 39,000 4,790 7,600 12,480 1,400 2,000 67,270 86,570 $ (14,570) 104,000 14,250 17,200 31, 200 3,700 4,700 175,050 219, 250 $ 21,750 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 salesclerks who each earns $500 per week, or $26.000 per year for each salesclerk.. 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 salesclerks who each earns $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 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, 73% of the insurance expense allocated to it to cover its merchandise inventory, and 20% of the miscellaneous office expenses presently allocated to it. equicu. 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. X Answer is not complete. ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Eliminated Continuing Expenses Expenses Expenses Cost of goods sold $ 477,000 $ 281,000 Direct expenses Advertising 29,500 13,000 16,500 Store supplies used 7,400 3,400 4,000 DepreciationStore equipment 7,300 0 7,300 Allocated expenses Sales salaries 104,000 39,000 % Rent expense 14,250 0 14,250 Bad debts expense 17,200 7,600 9,600 Office salary 31,200 Miscellaneous office expenses 4,700 Insurance expense 3,700 Total expenses $ 696,250 $ 344,000 $ 51,650