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	$	103,400		$	83,300
Cost of goods sold		45,575			46,850
Gross profit		57,825			36,450
Operating expenses
Advertising expense		5,055			4,260
Depreciation expenseequipment		10,130			8,530
Salaries expense		19,800			17,000
Supplies expense		1,960			1,750
Rent expense		7,085			5,970
Utilities expense		2,965			2,560
Total operating expenses		46,995			40,070
Net income (loss)	$	10,830		$	(3,620	)

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
Total indirect expenses

2. Based on contribution to overhead, should the electric guitar department be eliminated? Yes/ no