Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities...
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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 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Electric Acoustic $ 102,100 44,975 $ 84,300 46,850 57,125 37,450 5,015 4,340 10,100 8,530 20,100 17,100 1,960 1,780 7,065 6,000 2,995 2,640 47,235 40,390 $ 9,890 $ (2,940) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Acoustic Electric Combined Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 < Required 1 Required 2 > 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 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Electric Acoustic $ 102,100 44,975 $ 84,300 46,850 57,125 37,450 5,015 4,340 10,100 8,530 20,100 17,100 1,960 1,780 7,065 6,000 2,995 2,640 47,235 40,390 $ 9,890 $ (2,940) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Acoustic Electric Combined Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 < Required 1 Required 2 >
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The task here is to prepare a departmental contribution to overhead report To do this we need to calculate the gross profit for each department and then subtract the direct expenses from the gross pro... View the full answer
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