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, 2019
	Acoustic			Electric
Sales	$	102,500		$	83,100
Cost of goods sold		44,275			47,050
Gross profit		58,225			36,050
Operating expenses
Advertising expense		5,005			4,260
Depreciation expenseEquipment		10,080			8,530
Salaries expense		19,600			17,100
Supplies expense		1,980			1,720
Rent expense		7,015			6,050
Utilities expense		2,985			2,620
Total operating expenses		46,665			40,280
Net income (loss)	$	11,560		$	(4,230	)

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?

WHOLESALE GUITARS
Income Statement Showing Departmental Contribution to Overhead
For Year Ended December 31, 2019
	Acoustic Dept.	Electric Dept.	Combined
Direct expenses
Total direct expenses
Departmental contributions to overhead
Indirect expenses
Total indirect expenses

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