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Can you please show me how to solve the following question Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating
Can you please show me how to solve the following question
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 Cost Gross profit Operating expenses $103,400 $84,300 43,775 47,650 36,650 of goods sold 59,625 4,280 8,570 17,500 1,720 5,970 2,600 40,640 Advertising expense Depreciation expense-equipment Salaries expense Supplies expense Rent expense Utilities expense 5,035 10,100 20,100 1,980 7,085 3,025 47,325 Total operating expenses Net income (loss) $ 12,300 $(3,990) 1. Prepare a departmental contribution report that shows each department's 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? No YesStep by Step Solution
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