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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
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. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic $ 103,400 45,275 Electric $ 84,500 47,650 58,125 36,850 5,055 4,300 10,120 8,560 20,000 17,800 2,000 1,710 7,085 6,030 3,025 2,620 47,285 41,020 $ 10,840 $ (4,170) 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 31 Acoustic Electric Combined Direct expenses Total direct expenses Departmental contribution to overhead Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as ind expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Electric Acoustic $ 103,400 45,275 $ 84,500 47,650 58,125 36,850 5,055 4,300 10,120 8,560 20,000 17,800 2,000 1,710 7,085 6,030 3,025 2,620 47,285 41,020 $ 10,840 $ (4,170) 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 Based on contribution to overhead, should the electric guitar department be eliminated? Based on contribution to overhead, should the electric guitar department be eliminated? < Required 1 Required 2 > Yes No
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