Acme Manufacturing is trying to decide whether to eliminateDepartment Z, which has produced low profits or losses for severalyears. The company’s departmental income statements show thefollowing:

	A	Z	Total
Sales	$700,000	$175,000	$875,000
Cost of goods sold	461,300	125,100	586,400
Gross profit	238,700	49,900	288,600
Operating expenses
Direct expenses
Advertising	27,000	3,000	30,000
Store supplies used	5,600	1,400	7,000
Depreciation – store equipment	14,000	7,000	21,000
Total direct expenses	46,000	11,400	58,000
Allocated expenses
Sales salaries	70,200	23,400	93,600
Rent expense	22,080	5,520	27,600
Bad debts expense	21,000	4,000	25,000
Office salary	20,800	5,200	26,000
Insurance expense	4,200	1,400	5,600
Miscellaneous office expense	1,700	2,500	4,200
Total allocated expenses	139,980	42,020	182,000
Total expenses	186,580	53,420	240,000
Net income (loss)	$ 52,120	$ (3,520)	$ 48,600

The plant controller provided the following additionalinformation:

• The company has one office worker who earns $500 per week, or$26,000 per years, and four salesclerks who each earns $450 perweek, or $23,400 per year for each salesclerk.
• The full salaries of three salesclerks are charged toDepartment A. The full salary of one salesclerk is charged toDepartment Z.
• Eliminating Department Z would avoid the sales salaries but notthe office salary currently allocated to it.
• The store building is rented under a long-term lease thatcannot be changed. Therefore, Department A will use the space andequipment currently utilized by Department Z.
• Closing Department Z will eliminated its expenses foradvertising, bad debts, and store supplies; 65% of the insuranceexpense allocated to it to cover its merchandise inventory; and 30%of the miscellaneous office expenses presently allocated toit.

Required

Should Acme Manufacturing eliminate product Z? Show detailedcalculations to support your decision.