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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
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. Electric $ 105, 508 66,750 38,758 Departmental Income Statements For Year Ended December 31 Acoustic Sales $ 112,500 Cost of goods sold 55,675 Gross profit 56,825 Expenses Advertising 8,975 Depreciation-Equipment 1e, 150 Salaries 17,388 Supplies used 2,30 Rent 6,185 Utilities 3,045 Total expenses 46,785 Income (loss) $ 10, 120 6,25e 9, eee 13,500 1,700 5,95e 2,550 38,950 $ (208) 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 Acoustic Electric For Year Ended December 31 Combined Direct expenses Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 s 0 S 0 Required Required 2 > Required 1 Required 2 Based on contribution to overhead, should the electric guitar department be eliminated? Based on contribution to overhead should the electric guitar department be eliminated?
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