Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities...
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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 Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 311 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Electric Acoustic $ 103,100 44,075 $ 85,000 47,350 59,025 37,650 5,045 4,330 10,100 8,550 19,700 17,400 1,940 1,760 7,015 6,000 3,035 2,590 46,835 40,630 $ 12,190 $ (2,980) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? 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 311 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Electric Acoustic $ 103,100 44,075 $ 85,000 47,350 59,025 37,650 5,045 4,330 10,100 8,550 19,700 17,400 1,940 1,760 7,015 6,000 3,035 2,590 46,835 40,630 $ 12,190 $ (2,980) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?
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