Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect.

WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2017
	Acoustic			Electric
Sales	$	103,200		$	84,600
Cost of goods sold		44,975			47,650
Gross profit		58,225			36,950
Operating expenses
Advertising expense		4,975			4,310
Depreciation expenseequipment		10,130			8,510
Salaries expense		20,200			17,500
Supplies expense		2,030			1,710
Rent expense		7,055			5,960
Utilities expense		2,955			2,590
Total operating expenses		47,345			40,580
Net income (loss)	$	10,880		$	(3,630	)

2. Based on contribution to overhead, should the electric guitar department be eliminated? multiple choice

• No

• Yes

1. 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, 2017 Acoustic Dept. Electric Dept. Combined Direct expenses Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses