Question
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) Electric Acoustic $ 102,300 44,175 $ 84,700 46,850 58,125 37,850 4,985 4,280 10,100 8,590 19,600 17,100 1,960 1,760 7,055 5,950 3,045 2,590 46,745 40,270 $ 11,380 $ (2,420) 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 Advertising expense Gross profit Direct expenses Acoustic Electric Combined Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ < Required 1 Required 2 >
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