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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 Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses $ 102,900 44,375 Electric $ 83,100 46,950 58,525 36,150 5,045 4,320 10,140 8,550 19,400 17,800 1,950 1,760 7,095 5,980 2,965 2,620 46,595 41,030 Income (loss) $ 11,930 $ (4,880) 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 Direct expenses Acoustic Electric Combined Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 Required 1 Required 2 >
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