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Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its
Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Departmental Income Statements Acoustic $101,600 Electric $ 83,800 43,875 47,250 57,725 36,550 5,035 4,350 10,110 8,570 19,000 17,600 1,960 1,790 7,105 6,010 2,985 2,620 46,995 $ 10,730 $ (4,390) Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) 40,940 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 311 Direct expenses Total direct expenses Departmental contribution to overhead Acoustic Electric Combined Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Based on contribution to overhead, should the electric guitar department be eliminated? es Based on contribution to overhead, should the electric guitar department be eliminated? < Required 1
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