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Exercise 09-7 Departmental contribution report LO P3 Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guitar department
Exercise 09-7 Departmental contribution report LO P3 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. Electric $83,400 46,950 36,450 WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2019 Acoustic Sales $10,000 Cost of goods sold 44.675 Gross profit 58,325 Operating expenses Advertising expense 4,995 Depreciation expense-Equipment 10,100 Salaries expense 19,800 Supplies expense 2,020 Rent expense 7,025 Utilities expense 3.025 Total operating expenses 46,965 Net Income (loss) $ 11,360 A 4,310 8,520 17,000 1,730 5,980 2.560 140, 100 $(3,650) 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 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, 2019 Acoustic Dept. Electric Dept. Combined Direct expenses Total direct expenses Direct expenses Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses Required 2 >
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