Exercise 22-7 (Algo) Departmental contribution to overhead LO P3 4 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. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Departmental Income Statements Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Required 1 Required 2 Acoustic $ 102,300 45,575 56,725 For Year Ended December 31 Direct expenses 5,035 10,060 20,100 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. Total direct expenses Departmental contribution to overhead Electric $ 84,300 47,250 37,050 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead 1,940 7,015 2,975 47,125 $ 9,600 $ (3,950) 4,350 8,530 17,800 1,780 5,960 2,580 41,000 Acoustic Electric Combined 27

Exercise 22-7 (Algo) Departmental contribution to overhead LOP3 Below are departmental income statements for a guitar manufacturet. The company classifies advertising, rent, and utilities as indirect. expenses. The manufacturer is considenng eliminating its Electic Guitar department because it shows a loss. 1. Prepare a departmental contribution to overnead 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. Prepare a departmental contribution to overhead report