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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 Acoustic Sales Cost of goods sold $ 102,700 44,075 Electric $ 84,600 47,450 Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities 58,625 37,150 5,065 4,310 10,100 8,580 20,100 17,500 2,010 1,770 7,035 6,030 3,045 2,650 Total expenses Income (loss) 47,355 40,840 $ 11,270 $ (3,690) 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 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 < Required 1 Required 2 >
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