P$2-5$

J$.$P$.$ Max Department Stores

J$.$P$.$ Max is a department store carrying a large and varied stock of merchandise. Management is considering leasing part of its floor space for $$72$ per square foot per year to an outside jewelry company that would sell merchandise. Two areas currently in use are being considered: home appliances $(1,000$ square feet$)$ and televisions $(1,200$ square feet$).$ These departments had annual profits of $$64,000$ for appliances and $$82,000$ for televisions after allocated fixed occupancy costs of $$7$ per square foot were deducted. Allocated fixed occupancy costs include property taxes, mortgage interest, insurance, and exterior maintenance for the department store.

Required:

Considering all the relevant factors, which department should be leased and why?