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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 $ 84,100 47, 350 36,750 Departmental Income Statements For Year Ended December 31 Acoustic Sales $ 103,300 Cost of goods sold 45,675 Gross profit 57,625 Expenses Advertising 4,975 Depreciation-Equipment 10, 110 Salaries 20,100 Supplies used 1,960 Rent 7,035 Utilities 2,975 Total expenses 47,155 Income (loss) $ 10,470 4,340 8, 580 17,500 1,760 5,960 2,630 40,770 $ (4,020) 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 Acoustic Electric Combined Direct expenses Total direct expenses 10 0 0 Departmental contribution to overhead $ 0 9 0 $ 0 Required 2 >
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