Chapter 23 Homework Saved H A guitar manufacturer is considering eliminating its electric guitar division because its $76,000 expenses are higher than its $72,000 sales. The company reports the following expenses for this division Avoidable Unavoidable Expenses Expenses Cost of goods sold $ 56,000 Direct expenses 9,250 $1,250 Indirect expenses 1,600 Service department costs 1, 430 470 6,000 Should the division be eliminated? Eliminated Kopta 72,000 $ 125,000 160,000 143.000 Electric Guitar Division is: Sales Expenses Direct expenses Indirect expenses Service department costs Cost of goods sold Total expenses Net income (loss) Revenues from electric guitar division Avoldable expenses Revenues are greater than less than) avoidable expenses by 1,050 207.000 743.000 5,600,000 6,551.000 $ 7.600,000 $ 7.200.000 7.172.000 428,000 $ 428.000 S 20.000 The electric guitar division should be Kept