[The following information applies to the questions displayed below.J Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which ow profits for several years. The company's 2015 departmenta has produced losses or ncome statements shows the following ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2015 Dept. 100 Dept. 200 Combined 441,000 288,000 729,000 Sales Cost of goods sold 269,000 209,000 478,000 Gross profit 172,000 79,000 251,000 Operating expenses Direct expenses 17.500 14,000 31,500 Advertising Store supplies used 4,500 4100 8,600 Depreciation-Store equipment 4,800 3,300 8100 21,400 Total direct expenses 26,800 48,200 Allocated expenses 65,000 39,000 104,000 Sales salaries 9,410 4,780 14,190 Rent expense Bad debts expense 9,500 7,200 16,700 Office salary 15,600 10,400 26,000 Insurance expense 1,700 1,000 2,700 Miscellaneous office expenses 2,200 1,600 3,800 Total allocated expenses 103,410 63,980 167 390 Total expenses 130,210 85,380 215,590 41,790 35,410 Net income (loss 6,380 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 71% of the insurance expense allocated to it to cover its merchandise inventory; and 25% of the miscellaneous office expenses presently allocated to it. [The following information applies to the questions displayed below.J Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which ow profits for several years. The company's 2015 departmenta has produced losses or ncome statements shows the following ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2015 Dept. 100 Dept. 200 Combined 441,000 288,000 729,000 Sales Cost of goods sold 269,000 209,000 478,000 Gross profit 172,000 79,000 251,000 Operating expenses Direct expenses 17.500 14,000 31,500 Advertising Store supplies used 4,500 4100 8,600 Depreciation-Store equipment 4,800 3,300 8100 21,400 Total direct expenses 26,800 48,200 Allocated expenses 65,000 39,000 104,000 Sales salaries 9,410 4,780 14,190 Rent expense Bad debts expense 9,500 7,200 16,700 Office salary 15,600 10,400 26,000 Insurance expense 1,700 1,000 2,700 Miscellaneous office expenses 2,200 1,600 3,800 Total allocated expenses 103,410 63,980 167 390 Total expenses 130,210 85,380 215,590 41,790 35,410 Net income (loss 6,380 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 71% of the insurance expense allocated to it to cover its merchandise inventory; and 25% of the miscellaneous office expenses presently allocated to it