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	$	102,800		$	83,500
Cost of goods sold		44,575			47,550
Gross profit		58,225			35,950
Operating expenses
Advertising expense		5,015			4,340
Depreciation expenseequipment		10,070			8,600
Salaries expense		20,200			17,800
Supplies expense		1,930			1,700
Rent expense		7,085			5,990
Utilities expense		2,975			2,610
Total operating expenses		47,275			41,040
Net income (loss)	$	10,950		$	(5,090	)

1. Prepare a departmental contribution report that shows each departments 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 2. Based on contribution to overhead, should the electric guitar department be eliminated? O Yes