Required information [The following information applies to thequestions displayed below.] Elegant Decor Company’s management istrying to decide whether to eliminate Department 200, which hasproduced losses or low profits for several years. The company’s2017 departmental income statements shows the following. ELEGANTDECOR COMPANY Departmental Income Statements For Year EndedDecember 31, 2017 Dept. 100 Dept. 200 Combined Sales $ 440,000 $289,000 $ 729,000 Cost of goods sold 265,000 213,000 478,000 Grossprofit 175,000 76,000 251,000 Operating expenses Direct expensesAdvertising 16,500 13,000 29,500 Store supplies used 5,000 4,6009,600 Depreciation—Store equipment 4,800 3,100 7,900 Total directexpenses 26,300 20,700 47,000 Allocated expenses Sales salaries78,000 46,800 124,800 Rent expense 9,410 4,780 14,190 Bad debtsexpense 9,900 7,500 17,400 Office salary 15,600 10,400 26,000Insurance expense 2,100 1,300 3,400 Miscellaneous office expenses2,100 1,400 3,500 Total allocated expenses 117,110 72,180 189,290Total expenses 143,410 92,880 236,290 Net income (loss) $ 31,590 $(16,880 ) $ 14,710 In analyzing whether to eliminate Department200, management considers the following: The company has one officeworker who earns $500 per week, or $26,000 per year, and four salesclerks who each earn $600 per week, or $31,200 per year for eachsalesclerk. The full salaries of two salesclerks are charged toDepartment 100. The full salary of one salesclerk is charged toDepartment 200. The salary of the fourth clerk, who works half-timein both departments, is divided evenly between the two departments.Eliminating Department 200 would avoid the sales salaries and theoffice salary currently allocated to it. However, managementprefers another plan. Two salesclerks have indicated that they willbe quitting soon. Management believes that their work can be doneby the other two clerks if the one office worker works in saleshalf-time. Eliminating Department 200 will allow this shift ofduties. If this change is implemented, half the office worker’ssalary would be reported as sales salaries and half would bereported as office salary. The store building is rented under along-term lease that cannot be changed. Therefore, Department 100will use the space and equipment currently used by Department 200.Closing Department 200 will eliminate its expenses for advertising,bad debts, and store supplies; 75% of the insurance expenseallocated to it to cover its merchandise inventory; and 21% of themiscellaneous office expenses presently allocated to it. Required:1. Complete the following report showing total expenses, expensesthat would be eliminated by closing Department 200 and the expensesthat would continue. The statement should reflect the reassignmentof the office worker to one-half time as salesclerk.