TUMIY MUCHOPPES LLC questons Sprayeu Veluw. Help Save 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 Dept. 200 $288, eee 215, eee 73, eee Combined $731, eee 482,600 249, eee ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2017 Sales Dept. 100 $443, eee Cost of goods sold 267, eee Gross profit 176,000 Operating expenses Direct expenses Advertising 15,500 Store supplies used 5,500 Depreciation-Store equipment 4,800 Total direct expenses 25,8ee Allocated expenses Sales salaries 52,800 Rent expense 9,430 Bad debts expense 9,700 Office salary 18, 720 Insurance expense 1,7ee 2,000 Miscellaneous office expenses Total allocated expenses 93,550 119, 350 Total expenses $ 56,650 Net income (loss) 11,500 4,900 3,600 20,000 27, eee 10,400 8, 4ee 45,800 31,200 4,780 7,700 12,480 900 1,400 58,460 78,460 $ (5,460) 83,200 14,210 17,400 31, 2ee 2,600 3,400 152,10 197,810 $ 51, 190 o arch Help Save & Exit 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 sales clerks who each earn $400 per week, or $20,800 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 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 ENG 11 IN 5/2 o RI to search nveac1 A ' I6icen - cp ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Eliminated Continuing Expenses Expenses Expenses Direct expenses Allocated expenses Total expenses $0 $10 0 ENG 11321 IN 5421/26 e to search o