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Below are departmental Income statements for a gultar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating
Below are departmental Income statements for a gultar 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 Sales $ 103,500 Electric $ 83,100 Cost of goods sold 44,675 47,450 Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses 58,825 35,650 5,055 4,330 10,120 8,570 19,300 17,500 1,940 1,790 7,065 6,020 3,035 2,630 46,515 40,840 Income (loss) $ 12,310 $ (5,190) 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 Acoustic Electric Combined Sales Cost of goods sold Gross profit Direct expenses Salaries expense Depreciation expense-Equipment Supplies used Total direct expenses 0 Departmental contribution to overhead $ 0 $ 0 $ 0
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