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A guitar manufacturer is considering eliminating its electric guitar division because its $92,920 expenses are higher than its $86,520 sales. The company reports the
A guitar manufacturer is considering eliminating its electric guitar division because its $92,920 expenses are higher than its $86,520 sales. The company reports the following expenses for this division. Unavoidable Expenses Avoidable Expenses Cost of goods sold $63,000 Direct expenses 10,750 $2,150 Indirect expenses Service department costs 890 11,600 1,900 2,630 Should the division be eliminated? (Any loss amount should be indicated with minus sign.) Cost of goods sold Direct expenses Indirect expenses Service department costs Total avoidable expenses Revenues from electric guitar division Revenues are greater than (less than) avoidable expenses by Should the electric guitar division be Avoidable expenses
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