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.

Departmental Income Statements
For Year Ended December 31	Acoustic	Electric
Sales	$ 101,500	$ 84,400
Cost of goods sold	45,275	46,850
Gross profit	56,225	37,550
Expenses
Advertising	4,975	4,300
DepreciationEquipment	10,110	8,570
Salaries	19,800	17,400
Supplies used	1,960	1,730
Rent	7,005	6,000
Utilities	3,045	2,610
Total expenses	46,895	40,610
Income (loss)	$ 9,330	$ (3,060)

1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?

Prepare a departmental contribution to overhead report.

Departmental Contribution to Overhead
For Year Ended December 31	Acoustic	Electric	Combined
Direct expenses
Total direct expenses	0	0	0
Departmental contribution to overhead	$0	$0	$0

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

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