Question
Below are departmental income statements for a guitar manufacturer. The manufacturer is considering dropping its electric guitar department since it has a net loss. The
Below are departmental income statements for a guitar manufacturer. The manufacturer is considering dropping its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect. WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2015 Acoustic Electric Sales $ 103,100 $ 84,200 Cost of goods sold 45,275 47,550 Gross profit 57,825 36,650 Operating expenses Advertising expense 5,045 4,330 Depreciation expenseequipment 10,100 8,580 Salaries expense 19,600 17,500 Supplies expense 1,970 1,790 Rent expense 7,025 6,050 Utilities expense 3,035 2,620 Total operating expenses 46,775 40,870 Net income (loss) $ 11,050 $ (4,220 )
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