[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 $ 289,000 212,000 77,000 Combined $731,000 476.000 255,000 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2019 Dept. 100 Sales $442,000 Cost of goods sold 264,000 Gross profit 178,000 Operating expenses Direct expenses Advertising 15,500 Store supplies used 5,000 Depreciation Store equipment 5.000 Total direct expenses 25,500 Allocated expenses Sales Solaries 65,000 Rent expense 9,440 Bad debts expense 9,500 Office salary 21,840 Insurance expense 1,500 Miscellaneous office expenses 2.700 Total allocated expenses 109,980 Total expenses 135,480 Net Income (loss) $ 42,520 10,500 4,600 3800 18,900 26,000 9,600 8,800 44,400 39,000 4,760 7,600 14,560 600 2,100 68,620 87.520 5 (10,520) 104,000 14,200 17,100 36,400 2,100 4,800 178,600 223,000 $ 32,000 Ata Dept. 200 $289,000 212,000 77,000 Combined $731,000 476,000 255,000 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2019 Dept. 180 Sales $442,000 Cost of goods sold 264,000 Gross profit 178,000 Operating expenses Direct expenses Advertising 15,500 Store supplies used 5,000 Depreciation-Store equipment 5,000 Total direct expenses 25,500 Allocated expenses Sales salaries 65,000 Rent expense 9,440 Bad debts expense 9,500 Office salary 21,840 Insurance expense 1,500 Miscellaneous office expenses 2,700 Total allocated expenses 109,980 Total expenses 135,480 Net income (loss) $ 42,520 10,500 4,600 3,800 18,900 26,000 9,609 8,800 44,400 39,000 4,760 7,600 14,560 600 2,100 68,620 87 520 $(10,520) 104,000 14, 200 17,100 36,400 2,100 4,800 178,600 223,000 $ 32,000 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 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 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: 67% of the insurance expense allocated to it to cover its merchandise inventory and 16% 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 Total Eliminated Continuing Expenses Expenses Expenses Direct expenses Allocated expenses AKTUBUP $ 0 Total expenses Met Mil Connect > Question 5 - Chapter 23 Assignm X C Elegant Decor Company's Manas X + heducation.com/ext/map/index.html?con=con&external_browser OlaunchUrl=https%253A%252F%252Fims.mnheducation.com%252Fmghmiddleware%252F Assignment Saved Help Save & Ch 2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department 200 assuming that it will not affect Department 100's sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerk ELEGANT DECOR COMPANY Forecasted Annual Income Statement Under Plan to Eliminate Department 200 0 Operating expenses 3. Should Department 200 be eliminated? Should Department 200 be eliminated