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Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guitar department since it has a not loss. The
Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guitar department since it has a not loss. The company classifies advertising, rent, and utilities expenses as indirect Electric $85,000 46,850 30,150 WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2019 Acoustic Sales $101,900 Cost of goods sold 44,975 Gross profit 56,925 Operating expenses Advertising expense 5,075 Depreciation expense-Equipment 10,120 Salaries expense 19,600 Supplies expense 1,960 Rent expense 7,025 Utilities expense 22975 Total operating expenses 46), 255 Net Income (loss) $ 10,170 4,290 8,530 17,700 2,760 5,990 2,570 140,340 $(2,690) 1. Prepare o departmental contribution report that shows each department's contribution to overhead 2. Based on contribution to overhead. should the electric guitar department be eliminated? Seved Prepare a departmental contribution report that shows each department's contribution to overhead. WHOLESALE GUITARS Income Statement Showing Departmental Contribution to Overhead For Year Ended December 31, 2019 Acoustic Dept. Electric Dept. Combined Direct expenses 0 0 0 $ 0 0 $ Total direct expenses Departmental contributions to overhead Indirect expenses S 0 0 Total indirect expenses S 0 Required 2 > Prev 4 of 10 EL Next ! search o i 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? o earch C 90 3. US % 5 ON 8 0 7 6 9 3 4
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