Official Explanation:
There are no errors in the sentence as written. The sentence flows logically from clause to clause, pronouns are avoided where they would cause confusion, and the expressions used are all idiomatic. The parallel construction "expenditures are low and payroll is high" is correct, and the placement of the modifying phrase between commas, "rather than the department," is next to the "corporation" its drawing the contrast with.
Scan and Group the Answer Choices:
There is no obvious grouping of answer choices. (A) and (D) both use the phrase "the corporation, rather than the department," but (B), (C), and (E) all use very different phrases in its place.
Eliminate Wrong Answer Choices:
When (B) uses the plural pronoun "they," it is either illogically referring to "other departments" and distorting the meaning of the sentence, or it is incorrectly using "they" to refer to the singular "public relations department." Also, (B) changes the meaning of the sentence. In the original sentence, it is the corporation that absorbs the expenses, but here the department is absorbing them. Additionally, in (B) the antecedent for "they" is difficult to identify. As a plural pronoun, it could refer to "budgets" or "other departments."
(C) eliminates important information from the sentence (the comparison between the department and the corporation. It also uses an awkward construction to do it, as "in the process of absorbing" is unwieldy.
(D) repeats the word "as," making the sentence sound clumsy and changing its meaning. Also, it appears that the absorption of the expenses causes high payroll but not low operating expenditures.
Finally, (E), in addition to misusing the pronoun "its" (does the pronoun refer to "the budget" or "the department"?), uses the phrase "in the corporation’s effort to absorb." The comparison must be expressed as "higher than." There is no mention at all of "effort" or a similar concept in the original sentence.
The sentence as written, (A), avoids all the errors introduced by the other answer choices.
TAKEAWAY: Don't be tempted to overcorrect a sentence. If the original sentence contains no errors or awkward wording, (A) is the correct answer.