[The following information applies to the questions displayed belowj 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 DEOOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Dept. 100 Sales Cost of goods sold Gross profit Operating expenses $443, 000 269, 000 174, 000 Dept. 200 $289, 000 213, 000 76, 000 Combined $732, 000 482, 000 250, 000 Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses 15, 500 4, 000 5, 000 24, 500 11, 000 3, 500 3, 800 18, 300 26, 500 7, 500 8, 800 42, 800 Allocated expenses Sales salaries Rent expense Bad debts expense Office salary Insur ance eXpense Miscellaneous office expenses Total allocated expenses 65, 000 9, 440 9, 700 15, 600 1, 500 2, 600 103, 840 128, 340 $45, 660 39, 000 4, 750 7, 300 10, 400 800 2, 000 64, 250 82, 550 $(6, 550) 104, 000 14, 190 17, 000 26, 000 2, 300 4, 600 168, 090 210, 890 $ 39, 110 lotal expenses Net income loss) In analyzing whether to eliminate Department 200, management considers the following a. The company has one office worker who earns $500 per week, or $26,000 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; 70% of the insurance expense allocated to it to cover its merchandise inventory, and 25% of the miscellaneous office expenses presently allocated to it