Below are departmental income statements for a guitar manufacturer. The manufacturer is considering dropping 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, 2013
	Acoustic			Electric
Sales	$	102,900		$	83,200
Cost of goods sold		44,575			47,150
Gross profit		58,325			36,050
Operating expenses
Advertising expense		5,005			4,300
Depreciation expense-equipment		10,060			8,590
Salaries expense		19,900			17,600
Supplies expense		1,970			1,750
Rent expense		7,065			5,960
Utilities expense		2,965			2,630
Total operating expenses		46,965			40,830
Net income (loss)	$	11,360		$	(4,780	)

(1)	Prepare a departmental contribution report that shows each departments contribution to overhead.

(2)

Based on contribution to overhead, should the electric guitar department be eliminated?

	No
	Yes