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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 Electric 47,150 Departmental Income Statements Acoustic $ 102,400 44,975 $ 84,500 57,425 37,350 4,985 4,320 10,070 8,520 20,200 17,300 1,970. 1,740 7,065 5,990 2,975 2,590 47,265 40,460 $ 10,160 $ (3,110) 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 Gross profit Direct expenses
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