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. For Year Ended December 31 Sales Departmental Income Statements Acoustic Cost of goods sold $ 101,600 44,775 Electric $ 84,000 47,450 Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses 56,825 36,550 5,065 4,250 10,120 8,530 19,800 17,100 1,980 1,770 7,045 6,020 3,025 2,570 47,035 40,240 Income (loss) $ 9,790 $ (3,690) 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.
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