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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. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Acoustic Departmental Income Statements Electric $ 101,600 $ 83,100 45,275 47,250 56,325 35,850 5,035 4,290 10,120 8,530 19,800 17,100 1,960 1,760 7,015 6,050 3,025 2,590 46,955 40,320 $ 9,370 $ (4,470) Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) 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
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